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I remember the first time I saw a television ad for one of those “Cash for Gold” companies.

I laughed.  I actually laughed.  For a moment, I thought it was a spoof.  But as the ad went on, I realized somebody really, truly thought people were stupid enough to mail their gold to a post office box, in exchange for an unspecified sum of money.

That would never happen.


“Cash for Gold” is probably a billion-dollar business in 2019, and the only reason many of us never thought of the idea was because we didn’t believe people could be so stupid.

Case in point, if you described gold as “broken” and “unwanted,” nobody could really fall for that, could they?  I mean, it’s still gold.  It doesn’t matter if it’s “broken,” it’s still a goddam piece of gold, which is sold by weight.  Nobody could watch a television advertisement and be convinced that gold, which is an exchange-traded commodity with an easy-to-find spot price, could be worth less because it’s “unwanted.”

But alas, people are that stupid.

And tens of thousands of people across the globe, every year, take their “broken” gold and put it in envelopes (one company brilliantly marketed their special envelope as a “G-Pack,” which was sent for free), and mail to a buyer who does not specify the value and/or purchase price in advance.

I just can’t believe it.

I actually wrote about this ten years ago in a blog post appropriately called, “The Friday Rant: The Dumbest Thing I Have Ever Seen”

Just having re-read that post for the first time in a decade, I’m actually a little surprised (and disappointed…) about how less sarcastic I have grown.  Although I will note that my thoughts and feelings on “winners vs. losers” and the snowflake society we have become were perhaps a little before their time.

Just in case you have no idea what I’m talking about, and for some odd reason, haven’t already clicked on that blog link above for a fantastic read, let me dig into the YouTube archives and show you the original “Dollars4Gold” ad from 2008:

Dollars 4 Gold - As Seen on TV - YouTube

The quality isn’t great, but this is likely somebody videotaping their TV screen.

You get the idea though.

“Safe” and “convenient.”  And “from the privacy of your own home,” nonetheless.

Fast-paced, exciting, a smiling pitch-man, and all the while, trying to convince you that your unwanted gold is “old” and thus not worth as much, even though, technically, all gold is likely between four and ten billion years old…

Tell me if you think I’m wrong on this, and I’ll tell you I disagree.

Now when it comes to real estate, people can’t be as naive, right?

Once again, I have to thank my readers for emailing me not only the idea for this blog post, but the actual content as well!

I have here not one, but two hand-written solicitation letters that blog readers have found in their mailboxes over the last couple of months.

And much like the “Cash for Gold” pitch, these letters offer terms and services that aren’t really all that favourable to the seller.

Here’s the first one, and you can click on the image to enlarge:

I have chosen not to black out the name and/or contact information because these letters were left in public.  Also, those of you that don’t like real estate agents now have a viable alternative…

This letter is hand-written, and as the reader who sent me the image explained, “It even contained a small rip in the top right corner that was likely hand-made, to look like it was even more authentic.”

So what’s the pitch?

First of all, the letter uses CAPS to explain “AT FAIR CASH OFFERS.”

Then comes the dollar signs: $ We Buy Houses With Cash $

Who doesn’t buy houses with cash?  I mean, the term “cash offer,” historically, meant that the buyer didn’t need the vendor to take back a mortgage.  Over time, this has evolved to mean that the buyer is paying “cash,” and not taking a mortgage.

But in Toronto, why does this matter?

Why does it matter if a buyer has $1,000,000 in cash to buy a $1,000,000 house, or $200,000 and an $800,000 mortgage?  How does this benefit the seller?

My question is rhetorical, but some of you will suggest that the “cash buyer” is safer, because the bank could pull the funding, or an appraisal might not come through.  But these are extremely low-percentage scenarios; so low, in fact, that they really, truly don’t matter in today’s market.

These solicitation letters use the words “cash” for the same reasons that the “Cash for Gold” folks do; because the word itself makes us feel good.

Cash deal, no banks or additional fees involved.
Buy “As Is,” no need to clean or repair.

It’s true that there are no real estate fees involved, but the “no additional fees involved” seems to insinuate fees from the bank, when the buyer is actually responsible for the appraisal, if one is needed.  And it’s not like the seller won’t need a real estate lawyer in this case.

I also don’t think “as is” refers to a clause in the agreement specifying that no representations or warranties are being made, but rather it’s just a synonym for “no need to clean or repair.”

The $1,000 fee proposed at the bottom is awesome for the non-selling home-owner who does know of a friend who wants to sell, but again, doesn’t it just make the overall offering sound a bit fishy?

Here’s the second

Like the first letter, notice the use of the dollar sign!

$$$ I BUY HOUSES $$$

Who does that remind me of?


Ah, yes, this guy:

“$$$ I BUY HOUSES!!! $$$”

“I Buy Your Jewelry!”

You have to admit, whether you like this person’s solicitation letter or not, there’s a lot in common between the content of the letters and those TV pitch men like Oliver Jewelry and the like.

“If you wait, it might be too late.”

I mean, come on!  This is the oldest sales tactic in the book!


The only thing missing in the letter is something to the effect of, “And if you call now, in the next twenty minutes, we’ll give you a second Miracle Blade, absolutely FREE!”

Notice how both ads offer money for a referral to a neighbour or friend who is selling?  $1,000 and $500 respectively in the two letters?  I think that’s fair.  It’s like referring three friends to the gym, and getting a month for free.

It’s also not unlike:

Yes, just to show him the gold.  That’s all he wants!

Like when I asked my now-wife to come back to my condo to watch Anchorman after dinner on our first date.  I was really just in the mood for a movie that I’d already seen twenty times…

I don’t know the authors of two solicitation letters, so I can’t comment on them personally.

I will say, however, that in Toronto, in 2019, anybody who sells privately from a solicitation letter like those shown above, rather than exposing their home to tens of thousands of buyers on the open market, is going to come up short about 99% of the time.

There are cases where, for example, an extremely private individual who shudders to think about the idea of strangers walking through his or her home, would benefit from selling privately.

But I still think that person is leaving money on the table.

We all learned the following from watching The Simpsons twenty years ago:

I’m not so sure that one could argue the authors of such solicitation letters are attempting to “give back to the community,” nor are they running some sort of not-for profit.

So by the same token, I have no idea why a home owner would engage these people.

Yes, I’m biased.  I sell real estate for a living.

But I also don’t think that makes me incorrect.

I’d love to hear opinions to the contrary.  I’d also love to hear how much you got for your grandmother’s wedding ring through Harold The Jewelry Buyer…

The post The Solicitation Letter: New Trend or Classic Technique? appeared first on Toronto Realty Blog.

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I usually write my blogs between 10:30pm and midnight, but I also write them in my head, as the events unfold.

My wife will often see my lips moving with no sound coming out, as we drive in the car, sit on the couch, or even play with our daughter.  “Are you writing a blog?” She’ll ask me, as if she doesn’t already know the answer.

Real estate is such an incredibly dynamic industry, and the fact that people are the largest variable element in the mix ensures that new experiences will arise time and time again.

Last week, I had a listing that was probably one of the more eye-opening experiences in my career, and all along the way, I made mental notes of my interactions and experiences, because I knew they would be blog worthy.  However, upon the conclusion of the listing and sale, and having sat down to make sense of all that transpired, it was only then that I was able to take stock of just how many realizations and revelations I came do during the process.

The following is not flattering of buyers, the general public, agents, and essentially all of mankind.  Try as I might to eliminate negativity where possible on this blog, and although this experience actually was a positive one, the revelations I came to were, for the most part, inherently negative.

Honesty is the best policy, and it certainly always has been mine.  So I don’t aim to sugarcoat just how many nut-bars I met during this listing, how many clueless beings I encountered, and how many bizarre conversations I had.

The listing was for a property that had been in one family for over a half-century.  It was an estate, and with an estate usually comes family matters.  That complicated the listing, but it became the back-story once the property was actually up for sale.

The home was a complete “gut,” if you will, and many suitors for this property might have torn the entire structure down.

A detached, century-old Edwardian, 3-storey, 6-bedroom, on a 140-foot-deep corner lot with a rare 2-car private driveway, in an upscale central Toronto neighbourhood.

I co-listed this property with a colleague of mine, Chris, who actually took the lead on the listing.  At times, I was the bystander, and adding his experiences to my own essentially tripled the amount of blog-worthy stories I was accumulating along the way.

The property was listed at $1,995,000 with a scheduled offer night, and no pre-emptive offers, because of how complicated the disposition of the asset was made by the rules governing the estate.

We put up a “Coming Soon” sign a week before the listing, and the calls started immediately.

The calls continued through the listing period, and they never stopped.

Every time we heard the “beep” overhead at the Bosley Real Estate head office on Merton Street, Chris and I both held our breath, expecting the call to be for one of us.

We ended up receiving 12 offers on the property, and it sold for $2,700,000.

This property was extremely difficult to value, since it was somewhere between a gut-renovation and land value, and we knew that the eventual buyer would simply be the one with the most money, irrespective of real estate knowledge and/or experience.

We figured the price would land anywhere between $2.4 Million and $2.65 Million, and in the end, we were fairly close.

One method we used to come up with that price range was a simple comparative market analysis, based on sales in the area, and adjustments for variable features.  Another method was to work backwards from the $4.5 Million we felt that house would be worth in 8-12 months if it was completely renovated, with A+ finishes.

Both methods saw us come in around $2.55M – $2.6M, and we adjusted both high and low to come up with an overall range of expectations.

So where is my beef?

What are the realizations and revelations that I promised?

Hmmm…..where to start?

1) The public has absolutely no clue what they’re doing.

For all those who believe that they don’t need a real estate agent, or they can “do it on their own,” or that through House Sigma or Bungol, they’ve got everything they need – just listen to the following.

From the minute this property was listed, we entertained call, after call, after call from the most uninformed, naive, and clueless people in the city.

For a house that was listed at $1,995,00, and eventually sold for $2,700,000, we must have had a dozen people tell us that the house wasn’t worth the asking price.

I know what you’re thinking – that perhaps this was a negotiating ploy on their part, or that they were slow-playing us.  I assure you, that’s not the case.

These were also not nobodys, for what it’s worth.  Everybody who called on the property seemed to be a partner at a downtown law firm.

Now considering that Chris and I were working for the seller (more on this later…) and not the cold-calling buyers, we were in a tough spot when it came to answering the question, “What do you think this house is going to sell for?”  We take agency relationships and representation seriously, and it’s a fine line to walk when trying to work for the seller, and advise unrepresented buyers at the same time.

For the most part, we told people what I had written above – that we had done an analysis on the home and come up with values from $2.5-$2.6M, but the house could sell for less, or more, or who knows – it’s the Toronto market.

You might argue that our job should have been to entice as many stupid buyers as possible who wanted to offer the list price, just to increase the number of offers, and ultimately the sale price.  But we didn’t need “dummy offers.”  We knew we’d have anywhere from eight to upwards of fifteen offers, and the people bidding on this house weren’t going to be affected by the number of offers present.

Every day from the Wednesday on which the property was listed for sale, to the following Wednesday when offers came in, we were inundated with people who didn’t understand the market.

I showed the house to one gentleman – nice enough guy, who followed up with me the next day and said the following:

“Hi David, thanks very much for showing me the house yesterday.  It’s a diamond in the rough, and I would love to make this my next project.  I am a very serious buyer, I want you to know that.  But just nowhere near the list price.  If we could work something out with the seller, I would be willing to make an offer today.  And by the way, I would work through you.”

More on the “I would work through you” part later.

Now as I said, this was a really nice guy, smart, successful, and capable in every way.  But how in the world could he think that there was a chance this property would sell for “nowhere near the list price?”

This was a running theme, all week.

I received a call from a woman one night at 11pm (that should have been my first clue…) who said she wanted to make a “bully offer” on the property.  She said she was not working with an agent, and that she would like me to draw up an offer immediately…….for $1,995,000.

Yes.  A “bully offer” at the list price.

Oh – and conditional on inspection, even though this house was a complete gut, and being sold in “As Is Condition” with no representations or warranties.

I explained to this woman that, while I couldn’t really educate her on price, since she was not my buyer-client and I was working for the seller, that she would be wasting her time submitting an offer at that price, and that we weren’t able to work with pre-emptives/bully-offers because of the complexity of the estate selling the home.

She completely ignored what I said, and essentially demanded that I draft an offer as soon as possible, for the list price, and present it to the seller.  She added, “I’m doing the bully offer because I won’t bid in competition against others.”

If only it were that easy.

This went on, and on, and on, for a week.

2) Everybody thinks he or she is a genius.

Many of us can hit a baseball, as it’s spinning toward us at a high rate of speed, but who among us are good enough at doing so that we can turn this skill into a full-time job?

I can hit a baseball.  In fact, when I was coaching Bantam-age from 2007 to 2013 at Talbot Park, I would routinely show off my ability to “go yard” and sock dingers out of the park and into Sunnybrook Plaza.  But not once, for a moment, did I ever think of calling the Toronto Blue Jays and asking for a tryout.

Last week, every wanna-be house-flipper in the city called us, looking to make their millions on this house.

Perhaps it was attending one-too-many get-rick-quick seminars, or maybe the allure of Bitcoin had worn off, but every neighbourhood genius showed up at this house, looking to make their mark.

As Point #1 explained, none of them could come anywhere close to affording the property.  But that didn’t stop them from inquiring.  The inquiries led to an attempted negotiation on the price, then to a bitter take-down of the property and the marketability (some went as far as to talk about the “terrible market conditions” that currently existed), then eventually an angry departure.  All of these cowboys expected to pick the houses up for under-list, so they could do a crappy IKEA renovation, and expect that buyers in the $4,000,000+ price range wouldn’t know the difference.

When we told them that a “proper” renovation would be roughly $1,200,000, they scoffed.  “Bit more than a coat of paint,” one gentleman told me, and although he was looking to cynically counter what he deemed an astronomical estimate on my part, I think his statement was an indication of where he intended to take this home.

We had people telling us they could “build new” for $500,000.  We had people telling us the renovation would be $200,000.

For a house like this, and to attract buyers in this market, you might spend $200,000 on your kitchen alone.

And if you’re wondering where these people got their money, that’s a whole other story.  Because while some were just rich and stupid, others were stupid and poor.  One person asked me about a vendor take-back mortgage (I’ve never seen one before in Toronto), and another asked if I knew anybody looking to invest in a flip.

Imagine that.

This neighbourhood genius wanted to renovate and flip the house, but also wanted to know if I had any names and numbers in my Rolodex for people who would finance a first-time-flip.

The geniuses were coming out of the woodworks on this one…

3) Joe Average Buyer would cut his or her agent’s throat in a heartbeat.

Of the twelve offers submitted on the property, guess how many were from buyers to whom we had shown the property?


And all five of those buyers, as you’ll read further in point #5, wanted to use us as their conduit to the sellers.  All five buyers, who were working with an agent, were willing to spurn that agent, whether it was a life-long relationship or just the start of their real estate search, in order to get a better “shot” at winning the property.

As each successive offer was received on Wednesday night, I looked at the name of the buyer to see if it was familiar.  Over and over, I remembered this buyer, and that buyer telling us, “I don’t have an agent, I’d like to work with you guys,” only to end up going back to their agent once we turned them down.  None of these agents know how close they came to losing a client, and by that I mean that while we weren’t going to work with buyers and engage in multiple representation, many other listing agents would have.

The best was this one guy, what a beauty!

He approached my colleague Chris a week before the property came onto the market and was all hot-to-trot.  He said he didn’t have an agent, and wanted to make an offer through us.  In conversations around the office with some colleagues, Chris found that he had actually been working with another agent from our company, for a year.  But she ended that relationship because he was also working with another agent.  On offer night, he was set to make an offer through a fourth agent, but pulled out once there were 5-6 offers.  Maybe he was going to offer the list price as well?

Folks, if you want to use four agents, be my guest.

But I assure you, it gives you no advantage.

The winning bidder last week was somebody who was using a life-long family Realtor.  There was trust, history, and a relationship there.  This was also an agent with three decades of experience under her belt.

The second-place bidder was also somebody who had bought and sold with her Realtor four or five times, as the Realtor told me.

This one guy who ran around the city, bouncing from agent to agent, just didn’t seem to understand that he wasn’t gaining an advantage, and was really just making people not like him.  While I run a fair process, and I would never go out of my way to ensure that Person A, B, or C did not get the property, I know there are a lot of agents out there that can’t say the same.

So many of these buyers were looking for that “edge,” when all the while, they should have spent more time focusing on the property.

One of the buyers to whom we showed the house, to whom we also explained we would not represent as a buyer, called us on the day of offers to say, “We’re buying this house tonight, no doubt.  Just to let you know, I’ll beat anybody’s offer by $100,000 tonight.”  We called his agent – the one he would actually be making the offer through, and told him three things: 1) To stop calling us, because we were not his agent, 2) To not expect any favouritism, because it seemed like he believed there was some, 3) That he would not get a second chance, and/or the opportunity to bid $100,00 higher than anybody else.”

In the end, his offer was in the bottom half.

Again, I feel as though I can’t stress this enough: looking for some inside track, or some sort of advantage does you no good when you don’t possess the market knowledge to begin with.

4) Agents might be as clueless, or more, than some of the public.

We had twelve offers on the property.

The property sold for $2,700,000.

The property was listed for $1,995,000.

Can you guess what the lowest offer was?


And that was for a real estate agent purchasing on behalf of him/herself.

Some of you might find this funny, but it’s more serious than anything.  Just think that this agent is out there representing clients.  This agent, who bid $200,000 UNDER the list price, for a house that sold for $700,000 OVER the list price, has buyers and sellers that trust he or she.

That’s downright scary.

And this isn’t like the fat personal trainer or the doctor who’s sick with a cold.  This is way, way worse.

5) The public hates us for the same reason that they want to love us.  We are damned if we do, damned if we don’t.

This, believe it or not, may have been my biggest take-away from the week.

Chris and I decided very early on that we would not be representing any buyers in this process.  The sale was already complicated enough with the estate, but more to the point, every single person we showed the house to wanted to make an offer through us.

Had we decided to represent buyers, and had we placated every person who wanted to offer the list price, we could have had a dozen of our own offers.

But we told people that we wouldn’t be representing buyers, and we wouldn’t be, as the saying goes, “double-ending.”

The public hates double-ending, right?

Real estate agents are dirty, scuzzy, sleazy, and greedy!  Do away with double-ending, right?


Until you want to buy a house, then you flog the listing agent for being “too ethical.”

Honestly folks, we took actual abuse last week from buyers who were irate that we wouldn’t represent them at the offer table.  One after the next, buyers called us, viewed the property through us, told us they wanted to submit offers through us, and then chastised us when we said that they wouldn’t.

I had a conversation with one buyer – a downtown lawyer, like many of the others, whereby he told me:

“Look, this is very simple: I’m going to buy this house, and you’re going to make $65,000 selling it to me.  Money in your pocket, the seller gets more, I get a house.  Don’t overthink this one.”

He was rude, disrespectful, and arrogant.  And the more polite I was, the ruder he got.

I told him the same thing, five times, in five different ways: that I would not be presenting his offer and representing his interests.  Eventually, he changed his tune and said:

“Do you have kids?  I’ve got two of them.  I’m buying this house for my family, okay?  I’m not a contractor, I’m not going to tear this thing down, I’m going to make it into a beautiful home to cherish the memories of your clients who lived there for so long, and we just can’t wait to get in there, okay?  We love this house, my family is excited, and we need some help, okay?”

When I told him, for the sixth time, that my colleague and I were not representing any buyers, he went back to his original tone, and said:

“Fucking real estate agents, thick as thieves, dumb as a post.”  And then he hung up.  I never saw his name on paper on offer night.

Points #1 through #4 all sort of tied into this point.  In fact, they all kind of tie into each other.

If I could sum up the theme of these learnings in just five words, it would be the following:

Trust, ethics, loyalty, experience, knowledge.

There was almost no loyalty shown through this process, except by the three or four bidders at the top.

The buyer pool lacks knowledge and experience, and doesn’t know it.  What’s more, is they don’t seem to have any interest in gaining it either.

Everybody in the public wanted us to act unethically, and chastised us when we didn’t.

Trust is a two-way street, in theory.  In practice, it’s a fork in the road.

Perhaps this isn’t the most endearing way to start the week after the Victoria Day long weekend, but I enjoy sharing stories from the trenches of real estate, good or bad, positive or negative, with happy endings, or sad.

This listing certainly taught me a few things.

I hope some of you can learn from it as well…

The post Realizations & Revelations appeared first on Toronto Realty Blog.

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The post Happy Long Weekend! appeared first on Toronto Realty Blog.

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There was a lot of talk about this subject in the comments section of Monday’s blog, and even a couple of readers who asked me to weigh in.

I hesitated to opine about the topic for one really, really big reason: everything we discuss in merely speculation.

Sure, those of you who post anonymously can rest on your impossible-to-prove laurels, and claim, “I happen to know for a fact that X, Y, and Z individuals are responsible for $Q amount of money laundering each year,” but this conversation really has no definitive answers, and finite endings.

Not only that, I honestly don’t know if we’ll come to a consensus, or be able to offer any potential solutions.

Having said that, I do want to make one thing abundantly clear before we move on: I was wrong.

I was wrong, oh-so-wrong, about FINTRAC.

On November 30th, 2018, I wrote a blog post called, “The Friday Rant: Forget FINTRAC!”

Now to be honest, I still stand by most of what I wrote in that blog post, because I believe that governmental waste, inefficiency, over-spending, bureaucracy, and make-work projects are at an all-time high in Canada, and I don’t see any preventative measures in place with the FINTRAC regulations in real estate.

However, I will freely and humbly admit that I was wrong when I suggested that there was “zero evidence” of rampant money laundering in real estate.

It didn’t take long for my readers to jump all over that with press releases to the contrary.

But last week, the story absolutely blew up.

Most of the news came out of British Columbia, and it started with an article about luxury car sales:

The Vancouver Sun, Tuesday, May 7th, 2019: “‘Bags Of Money’ Being Used To Buy Cars In B.C., According To New Money Laundering Report”

From the article:

In one instance, a luxury vehicle was purchased from a dealer with $240,000 in cash. Several staff took the money to the car dealer’s bank because of safety concerns.

The bank accepted the money because it is not illegal to do so from a business such as a luxury car dealer, said former deputy RCMP commissioner Peter German, the author of the report.

Presumably, the bank made a large money transaction report to Canada’s financial intelligence gathering agency, the Financial Transactions and Reports Analysis Centre (Fintrac), added German.

Federal laws do not require that luxury car dealers make suspicious or large money transaction reports to Fintrac, something that needs to change, said B.C. Attorney-General David Eby.

Upon reading this article, a colleague of mine remarked, “Just watch – the next article will be about real estate.”

And he was right.

It only took two days, but the newspaper followed up with this:

The Vancouver Sun, Thursday, May 9th, 2019: “$5 Billion Laundered Through B.C. Real Estate, Inflating Home Prices: Report”

From the article:

The cost of buying a home in B.C. increased by as much as five per cent last year due to more than $5 billion in dirty money from organized crime laundered through the province’s real estate sector, according to a new expert panel report.

Former deputy attorney general Maureen Maloney chaired the panel on money laundering, which released a report Thursday that concluded it “cautiously estimates that almost five per cent of the value of real estate transactions in the province result from money laundering investment.”

In addition, she concluded: “The estimated impact of that would be to increase housing prices by about five per cent.”

“Successfully reducing money laundering investment in B.C. real estate should have modest but observable impact on housing affordability,” read the Maloney report.

She said actual figures are difficult to calculate — at one point dubbing them “estimating the inestimable” — but that the prevalence of dirty cash and organized crime trying to avoid taxes has distorted the economy.

However, her report concluded $47 billion in money laundering occurred in Canada in 2018.

Of that, $7.4 billion was in B.C., making it only the fourth-highest in the country behind Ontario, Alberta and the Prairies.

Wait a minute…just wait…

Did I read that correctly?

“Of that, $7.4 Billion was in B.C., making it on the fourth-highest in the country behind Ontario, Alberta, and the Praries?”

I find this fascinating for two reasons:

1) I can’t believe British Columbia is not first on the list, and yes, it’s for reasons that I believe some might find culturally-insensitive, but I would find it irresponsible not to have this discussion.

2) I can’t believe Ontario is first on the list!  What in the world…

Now if you read the rest of the article, you’ll see that they have provided this helpful, yet not entirely helpful graph:

(credit: Vancouver Sun)

This is great, except that it only goes up to 2015.

And the article is referencing $7.4 Billion in laundered money in B.C. in 2018, not to mention $47 Billion in Canada in total.

Later in the article, we’re given this beauty as well:

(credit: Vancouver Sun)

“No available estimates” plays right into my point, which is simply that I don’t know how accurate we can be when it comes to estimating money laundering, and that none of us really know how big the problem is.

I’m not downplaying this, but rather I question the accuracy, and attempts at attaining it.

The same goes for these never-ending conversations that took place from 2015 to 2018 about “foreign buyers.”

Remember when the evil, faceless, nameless foreign buyer was to blame for rising real estate prices?  Estimates on how much of a role they played ranged from as little as 3-5% from more credible sources (economists, CMHC, et al) up to 10-15% from those of us, myself included, that would go on feel more than anything else.

In markets like Toronto and Vancouver, in periods like the spring of 2017, foreign buyers were snapping up just about everything in sight.  An estimate of 10-15% during that period would have been low in the eyes of many.

I can’t find the article, but I do remember reading a quote from somebody at CMHC saying that while best efforts are made, the estimates were exactly that: estimates.  They couldn’t say for certain how close their numbers were to reality.

When it comes to the data the government has collected on money laundering, I actually think that these numbers may be more accurate than even a cynic like me would believe.

“Combatting Money Laundering in B.C. Real Estate” is a 184-page report that was put together by three professors at B.C. universities for the Minister of Finance and Deputy Premier, Carole James.

I don’t have time to go through 184 pages, but I did spend a solid 20 minutes reading through this on Tuesday.

Of note:

The amount of money laundering is significant, but it is difficult to measure.
The Panel conservatively estimates annual money laundering activity in 2015 in Canada at $41.3 billion ($46.7 billion for 2018) and in BC at $6.3 billion ($7.4 billion for 2018). This is the first money laundering estimate for Canada or a province generated on the basis of economic analysis and modelling and the first estimate of money laundering over time. However, it must be stressed that the inherent secrecy of an activity designed to hide the true nature
of financial transactions, together with the lack of reliable, internationally consistent data, means that there is no definitive way to measure money laundering activity. The methodology used is likely to generate an estimate of money laundering near its lower bound.

Money laundering investment in BC real estate is sufficient to have raised housing prices and contributed to BC’s housing affordability issue.
The data limitations that make it difficult to estimate the level of money laundering make it even more challenging to estimate the allocation of money laundering to specific economic sectors, such as real estate and the impact of that investment on house prices. The Panel cautiously estimates that almost 5 percent of the value of real estate transactions in the province result from money laundering investment. The estimated impact of that would be to increase housing prices by about 5 percent. Successfully reducing money laundering investment in BC real estate should have a modest but observable impact on housing affordability.

Most of the proposed solutions, of course, have to do with more government regulation, oversight, and undoubtedly new jobs created.

The authors of the report offered twenty-nine recommendations on how to combat money laundering, and transparency seemed to be the running theme.

This week, the articles in the Vancouver Sun continued to run:

Monday, May 13th: “Attorney General Wants To Name Names In A Public Inquiry On Money Laundering”

Tuesday, May 14th: “The Power Of Public Inquiry Into Money Laundering: How Much Will B.C. Have?”

And finally this week, the conversation turned to Toronto:

Tuesday, May 14th, 2019: “Realtors Call For Land Registry To Crack Down On Money Laundering”

On the surface, this is more P.R. by the Ontario Real Estate Association and the Toronto Real Estate Board to act as though Realtors care.

But a bit deeper lays the fact that there’s a fine line between “protecting privacy” and “assisting money launderers,” or at least that’s how I perceive all of this.

Let’s not forget that if you want to know the directors of any numbered Ontario corporation, you can pull those records.  The more sophisticated individuals will use shell companies, offshore accounts, and anything you can dream up in movies or TV shows.  But not every money launderer is so sophisticated.

A very important part of the Toronto Star article says the following:

Registries have proven effective in discouraging criminals, who buy homes through numbered companies and with cash to make it difficult or impossible to trace the origin of funds. Cash purchases of luxury real estate by anonymous companies plummeted 70 per cent in areas where the U.S. Department of Justice imposed a requirement that purchasers reveal their identities.

Great, so sign us up.

British Columbia is the first province in Canada to institute such a registry, and it won’t (or shouldn’t…) be long before the province of Ontario follows suit.

The one part of the article I took issue with was this:

Garry Clement, former national director of the RCMP’s proceeds of crime program, now trains bankers and other professionals — including real-estate agents — on how to catch money laundering.

He said he was shocked when he asked a room full of real-estate agents how many of them had ever accepted cash payments.

“The hands shot up,” he said. “They just didn’t see anything wrong with it.”

Even when they suspect something is fishy, real-estate agents don’t want to turn down big commissions.

“They haven’t taken (the money laundering rules) seriously,” he said. “This plays into the hands of organized crime.

“They’ll never get it right until some prominent agent or broker is walked out in handcuffs,” he said. “At some point, everyone has an obligation to put ethics ahead of profit.

A few points:

1) I have never seen cash in a transaction, through 15 years in this business.  Not a dollar, let alone $100,000.

2) I would never accept cash in any form, so the quote, “They just didn’t see anything wrong with it” can’t be taken at face value.

3) “Turning down big commissions” has nothing to do with this, or at least, not for agents like myself.

As I write this, I have two listings for which the general public is clamouring for me to represent them in a multiple-offer situation.  There’s a lineup at the door, for real.

I have told every single one of these people who I will not, under any circumstances, represent both buyer and seller.

I even have people – in this area, many of them Bay Street lawyers or financial service employees, explaining to me, “You stand to make $XX more if you double-end this, what’s the problem?”

I value my reputation and good standing above all else, because it’s how I got to where I am.

So these quotes above, about agents “not seeing anything wrong with it” and “not wanting to turn down big commissions” are ones that I find insulting.

I don’t believe this quote is accurate.  Yes, there are bad apples in our industry, but most agents wouldn’t know what to do with $10,000 in cash, and somewhere in their brokerage, management and/or ownership would advise them to proceed in a different direction.

If somebody showed up to my brokerage with $100,000 in cash, I would turn them away.  I’d like to believe that so too would every other agent in my firm.

So in the end, I offer zero solutions here, folks.

But I was honest about this in the beginning.

Discuss, debate, opine, but what’s the solution?  Do any of us have one?  Do any of us trust the government to figure this out?  Or do we believe that a notably-reactive government can never expect to stay one step ahead of the sophisticated money launderers?

One thing I believe we can all admit, however, is that the data provided in the reports referenced above, even if slightly inflated (when in fact they could be conservative), are cause for concern for all Canadians.

I, for one, am in favour of anything that OREA or TREB suggest we implement, as an industry.

The post What Level Of Money Laundering Exists In The Ontario Real Estate Industry? appeared first on Toronto Realty Blog.

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Do you watch Billions?

I love it.  I absolutely love it.

It’s so well-written, so engaging, the characters are so dynamic, and above all, the music is phenomenal.

Do you remember seeing The Social Network and doing a double-take when the words “Music By Trent Reznor” appeared on the screen?  Huh?  Really?

That’s how I felt when I saw that Eskmo is the composer for “Billions.”

The music is so dark, and yet so appropriate.  Just like in The Social Network.

In Season Four of Billions, there’s a fantastic episode where Chuck Rhoades, a former US Attorney, now wanna be “fixer,” needs to do a favour for somebody.  He needs to obtain a conceal/carry gun permit for a friend.  The sequence of events that unfolds is fascinating.

Chuck has to do a favour for the chief of police in order to obtain the gun permit, but in order to do that favour, he must do another favour for somebody else.  That person wants tickets to an exclusive Hanukkah event, and in order to obtain those tickets, Chuck needs to do another favour for the person who has them.  That person wants an “All Access” pass to Deer Vally Ski Resort.  But to give up that pass, Chuck must do that person a favour as well…

Chuck refers to this as “borrowing from Peter, to pay Paul, to pay Mary,” which is a minor spin on “Manoeuvering the Apostles;” a religious saying that essentially means to pay one debt by incurring another.

I watched this play out during the episode of Billions, and I wondered how far it would go.  How far down the line would Chuck need to move?  How many favours would he have to do, and how many debts would he need to incur?

It was like dominoes.  And you just hoped that the continuity was fluid, and that one favour-trader in the mix wouldn’t change his or her mind.

Over the weekend, I had my first experience with a sale conditional on the sale of a buyer’s property in quite a long time.

I wasn’t involved in the sale itself, but rather the mere mention of the notion was the first I had heard of it in years.  And as I explained to my clients, and to the agent that was debating accepting such an offer, it could turn into a never-ending line of dominoes, or borrowing from Peter to pay Paul.

It reminded me oh-so-much of that episode of Billions, and I actually referenced the episode to the listing agent I dealt with.

For those of you that don’t know – and this is probably because you can’t fathom such a thing in the Toronto market, some properties are actually sold conditionally on the sale of the buyer’s own property.

Here in the central core, we’re used to buying condos conditional on the satisfactory review of the condominium corporation’s status certificate, and that’s usually a 2-3 day condition.

We’re used to buying houses or condos conditional on obtaining satisfactory financing terms (although we know these conditions don’t work when there are multiple offers), often for as long as five business days.

And we’re also used to buying houses conditional on a satisfactory home inspection (again, buying a house in competition with a condition is near-impossible in a hot market).

But what about a longer condition?

What about a more complicated condition?

What about both?

Imagine approaching the seller of a house and making an offer with a 30 or even 60 day condition that you are able to sell your own home.  Is that something that you had ever even considered?

Those of you who live outside Toronto, and/or can remember a time when real estate wasn’t absolutely red-hot, are quite familiar with the idea of a condition on the sale of a buyer’s property, and probably feel like I’m acting like 9-year-old by explaining what it is.

But through fifteen years working in the Toronto market, I have only come across this condition once.  That is, until this past weekend.

Clients of mine were interested in a house in Markham, and the listing agent – a new(er) agent who possibly wasn’t exactly sure what he was supposed tell prospective buyers and their agents, informed us that he had an offer in hand that was conditional upon the sale of the buyer’s home.

Now let’s leave aside for a moment what terms and conditions an agent can disclose with regards to a competing offer.  That’s a topic for another day, albeit an important one.

The agent told us that he had two offers, and while one was only conditional on financing, it was a lowball, and wouldn’t be considered (I know, I know, now you want to discuss disclosure…), and the second offer that he had was for a decent price, but with a lengthy condition.

He didn’t tell us for how long the condition would be (at least he kept something to himself), but did say that the sellers were willing to risk it.

Oh – and he did tell us the price of that offer, which, again, might lead the discussion back to disclosure once again, but just work with me here, folks.

So armed with this knowledge, my clients and I decided to submit an unconditional offer, which is very rare in this particular market.  They have their financing in place, the house is 2-years-old and contains zero of the red-flag building materials that we look for here in the central core (clay pipes, lead pipes, knob-and-tube wiring, aluminum wiring, asbestos, UFFI, etc), and having completed a thorough investigation of the house themselves, they were more than comfortable with the condition of the home.

Our offer was submitted about $15,000 lower than the competing bid.

And sure enough, the agent called back to say that we’d have to match the competing bid in order for us to win out.

This was absolutely, positively, not something we would consider.

In our minds, we were handing them a gift!  For a mere $15,000, they could sell their house tonight, firm.

The other agent didn’t see it that way.

In his opinion, the other offer, even though it was conditional on the sale of the buyer’s property, was more valuable.

Well, colour me surprised!

He went on to explain that he’s worked with this condition before, in fact, he had a situation recently where the condition went on down the line.

Listen to this – he sold a property that was conditional on the sale of the buyer’s home.  That buyer was able to sell his home, however, it was also conditional on the sale of a subsequent buyer’s home.

I listened to him describe the situation as though it were normal, and I just couldn’t make sense of it all.

I was reminded of Chuck Rhoades in Billions, and while I had faith in Chuck, I didn’t have faith in this daisy chain of property sales.

Property A was sold, conditional on the sale of Property B, which was sold conditional on the sale of Property C.

And then what?  How about D, E, and F?  Where would it end?

I asked him, “How long is the condition for the offer you have in hand?”

I mean, how long would you actually give a person to satisfy a condition?  15 days?  Is that too long to tie yourself up?  But also, can you expect a seller to move that quickly?  30 days?  Why would anybody accept such a condition?

Get this – it was sixty days.

And the craziest part in all of this?  There was no escape clause!

An escape clause is something that, as with the condition described above, isn’t that common in our current Toronto market.  As you might expect, the clause allows the seller to escape from a binding Agreement of Purchase and Sale, subject to certain conditions.

Let’s say Property A is sold conditional on the sale of Property B.  This condition is for 30 days.

But along comes Buyer C, who wants to buy Property A.

Buyer C can submit an offer conditional on the seller of Property A being released from that Agreement of Purchase & Sale so long as that APS has an escape clause.

The seller of Property A can activate the escape clause, and the original buyer would typically have 48 hours to firm up the deal, or the deal would terminate.

That’s the Coles Notes on how this works, apologies if an 800-word example is needed but I kind of want to move on.

So you can argue that accepting an offer that’s conditional on the sale of a buyer’s property, so long as there is an escape clause, makes sense.  I would still argue it does not, save for very cold markets where sellers have absolutely no alternative.

But imagine accepting an offer with this condition, and no escape clause?

It’s absurd.

And how much investigation would you have to do on the buyer’s property in order to consider it?

If it were me, I’d want to know the following:

1) Where is the property? 

What’s the address?  What condition is the home in?  How old or new is it?

2) What’s the price?

Is this a move-up buyer?  Do they have an easier-to-sell property that’s at a cheaper price?

And what’s the property worth?  Are the sellers going to list their $750,000 home at $849,900 and just “see how the market responds?”

3) What are the market conditions like in this area?

Feeding into the first two questions, how long would we expect a property like this one, at this price point, to sell in this market?

What’s the average length of time for a property like this to sell?

4) Who is the listing agent?  What is the listing strategy?

If we’re assuming that the buyer-agent in the first transaction is going to be representing that buyer in the sale of the property, then who is this agent?  What is his or her track record like?  Do they sell a lot of real estate?  Are they brand new in the business?  What is their average list-to-sale ratio, and how long do their properties sit on the market?

What is the listing strategy here with respect to price, offers, etc?  Is the property going to be cleaned, painted, and staged?  Will the dogs be home for showings?  Will the snakes be home too?

There are so many questions I’d have in a situation where the buyer is looking to purchase with a condition on the sale of his or her property, and there’s one reason why I could almost never bring myself to consider such a condition: control.

A seller of real estate is his or her own boss, and controls his or her own destiny.  The minute you accept an offer that is conditional on the sale of somebody else’s property, then you give up control.

You can’t control if they list the property at a reasonable price, you can’t control if the property shows well, and you can’t control what they do when an offer comes in.

Only in a depressed market, with no other options, would I ever consider selling a property conditional on the sale of the buyer’s property, and I don’t ever believe that this will become a reality in the central core market here in Toronto.  The older folks will laugh at me for saying this, and the bears will cross their fingers that I come to eat those arrogant words, but I just can’t envision this day coming.

As for my clients looking to buy in Markham, I guess they’ll find out all about the sellers’ tolerance for risk rather shortly.

If you could sell your home for $810,000, firm, tonight, or wait upwards of sixty days, with no escape, to get $825,000, what would you do?

The post Selling Your Home Conditional On The Sale Of A Buyer’s Property appeared first on Toronto Realty Blog.

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I have the best blog readers, I swear.

Do you know that every Sunday, Tuesday, and Thursday, I wake up and say, “Today is the day; today is the day that I have absolutely nothing to blog about.”

It happens like clockwork, every couple of days.

Most of my blog topics are borne of my daily interactions with other market participants, many are regular “features” such as the monthly market roundup and look at statistics, photos of the week or MLS musings, and then many topics come directly from the readers themselves.

A reader emailed me two weeks ago with an observation and a question, and I immediately opened up WordPress and began typing.  It made for a great blog post, and the reader emailed me back the next day and said, “LOL…..glad I could help!”

So keep them coming, folks.  I can’t tell you how much I appreciate the suggestions.

This week, no less than ten people emailed me a real estate rap video that has not only been trending online, but has also been picked up by Global News, CBC, and BlogTO among others.

I haven’t heard of the agent, but it looks as though he’s got his “niche” in the market, working for “Real Estate By Bike.”

He was also voted the “Best Real Estate Agent In Toronto” by NOW Magazine.

He’s selling a “little yellow house” that, on its own, looks pretty non-descript.

It’s a 12.5 x 110 foot lot on Coxwell Avenue, 1-bedroom, 1-bathroom, no parking.

Priced at $499,900 with an offer date set for May 13th.

The house is cute, but it’s the price point that’s attractive.  So I have to wonder: on its own, would this house do well on the market?  Or does it need………….a rap video?

Check this out, I have to admit it’s quite clever:

Lil Yellow House - Real Estate Rap Video - YouTube

Kudos to this agent for thinking outside the box, but also for taking the time, and spending the money necessary to produce this video, and generate the amount of press that it has!

The property has been on the market for a mere four days, but already the following media articles have popped up:

CBC News: “Will A Rap Video Convince You To Buy This Home?”

Global News: “Lil Yellow House For Sale Becomes Viral Rap Video Thanks To Toronto Realtor”

Hamilton Spectator: “You MIght Forget An Address But You Won’t Forget A Catchy Name”

Toronto Storeys: “This Realtor Made A Rap Video To Sell A ‘Lil Yellow House’ In Toronto”

There are far more, I just don’t have time to post them all.

So my question becomes: is this effective?

On the one hand, how can it not be?  It’s generated significant social media chatter, the media has picked it up, and look – I’m a ‘competitor’ but I’m writing about it!

On the other hand, do you risk being cheezy?  Or not connecting with the entire buyer pool?

Somebody sent me this the other day:


At the risk of insulting many of you, I feel as though I need to spell this out.

For those of you who aren’t completely caught up with 2019-youngster-vernacular, “AF” means “As Fuck.”

It’s a fad-term that’s been trending for a year or more, and is very commonplace.  “Long day, I’m tired AF,” etc.  I’ve seen it in a thousand memes and social media posts, and I’m waiting for it to die out just like “Give’er” did around 2003.

So when somebody tries to think outside the box, and instead of putting up a traditional “SOLD” sign, gets cheeky and puts up “SOLD AF,” I think that plays well with a certain demographic (not to label, but I think it would be younger people), but will that agent ever get a phone call from a 65-year-old downsizer as a result?

I’m suddenly reminded of the adage, “If you’re not failing, you’re not trying,” and I give props to anybody out there that tries to think outside the box, but I would advise them same people to tread carefully.

I love the “Lil Yellow House” video, and I think it works.  I think this agent got a ton of publicity for the house, and I think it’s going to sell for more as a result.

Now as for other real estate rap videos, it’s Friday, so let’s have some fun.

Here’s a real estate agent out of Chicago:

Rapping Realtor | Trinette Lindsey (dir. by Zakharchuk Presents) - YouTube

This lady has pretty good rhythm, a great voice, and I like the beat.

The video is a bit short, but so too are people’s attention spans.

She runs down her entire list of services, and gets to the point.

I like it!

Here’s a better-produced, and longer video from 2014 featuring a team of three agents from Los Angeles:

Every Day I'm Hustlin- Real Estate Rockstars- Rap Video from Santa Clarita Realtors - YouTube

The guy is tough to listen to, but the girl in the middle – Sara Spalione, does a pretty good job.

It’s not nearly as “real” as the first video though.

Trinette Lindsey from Chicago was more or less herself.  These three agents are basically doing a parody of themselves.

Now if you want a parody, then you’ll love this video.

“Zillow?  It’s Me.”  Based on Adele’s “Hello?  It’s Me.”

The video isn’t the key here – it’s the lyrics, while not catchy or really entertaining, they’re on point, especially for those of us that work in real estate:

Zillow? It's Me. | Agentology Inc. - YouTube

And last, but certainly not least, we have the “Rapping Realtor” from San Diego, Rafael Perez, who I’ve featured multiple times on this blog before

RAP Real Estate Agent San Diego theHomeMap.com - YouTube

I don’t know what’s better: that his lips don’t come anywhere close to matching the audio, or that he tries to rhyme words that don’t come anywhere close to rhyming.

That’s it for me this week, folks.  Have a great weekend!

The post Real Estate Music Videos: Are They Effective? appeared first on Toronto Realty Blog.

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I realize that what had become an unofficial monthly feature here on Toronto Realty Blog – some sort of “stats roundup” or post about the numbers from the past month, had fallen by the wayside of late.

March was busy, April was busier, and May is just nuts so far.

But I’d be remiss if I didn’t sit down and examine the recent TREB numbers, thus allowing the readers to debate and fling a little mud, and so I set some time aside on Tuesday morning to ensure I don’t miss yet another month with this feature.

Anecdotally, I can tell you that this might be the busiest month I’ve ever had.

I’m not a “listing agent” per se, in that I don’t have billboards and garbage cans in a neighbourhood, and sit on the PTA, while handing out ice cream in the park in attempts to woo the area residents, and yet l still find myself with some 13 listings this month.

Where did all the activity come from?

A few of the listings are coming from clients who bought, and now need to sell.

But the majority of listings are merely “sellers” in the traditional sense.

Tis the season for selling, as the real estate calendar goes.

Ask anybody with an iota of real estate knowledge, “What do you think is the busiest month of the year in the real estate market?” and I would hazard a guess that an overhwelming majority of folks would answer, “May.”

Some might suspect it’s June, which is warmer, prettier, and people might be marginally happier, and ready to transact.  Some might suspect it’s September or October, which are typically very busy months in a shortened Fall “season” for real estate.  April is a good month, as is March, but May, historically, has been something otherworldly.

I told my wife toward the end of April, “We need to be on the same page for the month upcoming,” and warned her about what lay ahead.  Anywhere from 12-15 listings, which means upwards of 15 “offer nights,” plus somewhere in the neighbourhood of 10-20 offers for buyers.  That means one full Saturday of work, the odd half-day on Sunday, and a lot of nights where our dog, Bella, will have to stand in for me.

I felt as though 2019 started slowly, even though the numbers pointed towards a busier-than-usual few months to start a year, and now I see the market ramping up big-time.

I don’t know if it’s going to top out in May, or continue into June, but what I’m seeing, and certainly what I’m experiencing with myself and my team, points to a potentially chaotic month.

When I sat down to look at the April numbers, my eyes first went to where they always go: price.

How can a person not start there?  It would be like taking a bite of your side-salad before you cut into your steak.

But after looking through sales, active listings, new listings, days on market, and looking at the Home Price Indexes as well as some of the 905 data, what I’m seeing, in my humble opinion, is a month of April that showed a re-energized real estate market.

Let’s leave the sales and listings for another day and rather focus on price, although it bears mentioning that with sales up year-over-year, and active listings down year-over-year, it’s no wonder prices increased.

The average home price in Toronto in April was $820,148.

This is significant for two reasons, with the second being far more important than the first.

For starters, this represents a 4.0% increase, month-over-month, in the Toronto average home price from March.

Monthly fluctuations aren’t the best measure of the market, but it’s somewhat hard to ignore.

For those that want to suggest it’s meaningless, you can, and you might be correct.

The average home price increased from $748,328 in January to $820,148 in April – an increase of 9.6%.

The average home price increased, during the same time period in 2018, from $736,783 to $804,584 – an increase of 9.2%.

But the second reason why I think this $820,148 number is significant, is because it’s the highest average home price we’ve seen in quite some time.

How long is “quite some time?”

Just ponder it, for a moment.

How about………..23 months?

Really?  Does that sound right to you?  The $820,148 average home price we saw this past month is the highest in 23 months?

Yes, it is.  Since May of 2017, which was the sub-peak of that incredible spring, 2017 market that we all remember.

Now here’s where the bulls and the bears both get to make arguments.

The bulls will say that, as I have described above, this is the highest point in 23 months.

The bears will say that the $820,148 average sale price is an absolute joke, when you consider the “peak” was $920,791 in April of 2017.

And I believe that both have a case.

Let’s look back at the average sale price since the start of 2017:

Yes, a far cry from the spring of 2017, indeed.

We all know where the market was back then, although even the most vicious market bear must admit that it sure doesn’t “feel” like we’re off by 10.9%.

In the 905?  Sure, and probably more so.

But in the GTA?  On average?  I don’t feel it.  I don’t see it.  And while the numbers tell me I’m positively incorrect, my point is that this chart is a classic case of your eyes playing tricks on you, because it’s not telling an accurate story of where the market is today.

Now the other point I would make, or rather number(s) that I want to highlight, is with respect to the $800,000+ number.

Every year starts slow, and low, so the $748,328 average sale price we saw in January came as no surprise.

But the market has worked, and worked, to get over the $800,000 number – a number that seems insignificant, relative to the $920,791 peak, but actually holds more value than you might think.

Let me re-colour the same chart above, as follows:

The line under May-2017 shows us the last time that the average home price was over $800,000.

The yellow highlights show us the months that were over $800,000.

And if you count up the months in between May of 2017, and this past April of 2019, you’ll note that in the span of twenty-two months, only FOUR times was the average home price above $800,000.

And now we return, once again.

The spring of 2018 showed us a very flat market – $804,584, $805,320, and $807,871 in April, May, and June respectively, which is the busiest 3-month stretch of the year, as well as likely three of the busiest four months of the year as well.

What I’m curious to see, with respect to this April, May, and June, is whether:

a) The “flat growth” trend will continue, and we’ll see $823,129 and $825,270 in May and June, or
b) We’ll see a May-spike, something along the lines of $840,000

After looking at the average sale price in Toronto, I wanted to look specifically at the 416.

As noted in this space many times before, and as I would believe is common knowledge, the 416 has not been hit anywhere near as hard as the 905 since prices dropped in early 2017, and with condo prices in the 416 up substantially, as well as many other freehold pockets, some might argue the 416 has been a wash in the past two years.

The numbers don’t back that up, but they do come close.

The average 416 home price in April was $903,992, although this actually does top May of 2017, and only falls short of April, unlike with respect to the overall GTA-wide average.

But I wanted to compare the 416 to the GTA, in terms of a “decline since the peak” just to hone in on where things really stand.  So I put this together:

Lots of red!  Like blood in the water!

And maybe a little redundant, but it paints a pretty picture.

The average home price is down in every month since the “peak,” otherwise it wouldn’t be the peak!

But with a return to the highest average home price in the GTA since May of 2017, we can see that the decline is now “only” 10.9%, and that’s probably made up of some 30% declines and 15% gains.  It’s an average, after all.

Specifically in the 416, we see that the decline is less than half as large, as we’re now off only 4.2% since the peak.

More notable is a comparison between April’s.

The GTA-wide decline of 10.9% in April of 2019 is only 1.7% less than the 12.6% in April of 2018.

But the Toronto-wide decline of 4.2% in April of 2019 is 4.1% less than the 8.6% figure in April of 2018.

This tells us that not only has the 416 experienced a much lower decline, but it’s recovering at a far faster pace.

I would show you the 905 stats, if only TREB tracked them in an easy-to-find number, like those above.  But just know that if the 416 is down 4.2%, and the GTA, which is partially made up of that 416, is down 10.9%, then the 905 must be somewhere in the 15% neighbourhood.

My last examination of price is going to be through the TREB Home Price Index, or “HPI.”

For those of you that don’t know what the HPI is, this video will explain it better than I can:

MLS® Home Price Index - YouTube

The TREB HPI is essentially a “smoother” average, with the volatility removed, while still painting an accurate picture of the market.

You could compare it to how a “simple moving average” is a cleaner, smoother line than simply a day-to-day closing price in the stock market.

In this chart, I’m going to look at the increase/decrease in each month, relative to April of 2019:

The first thing you will undoubtedly see here is just how much less blood-red there is!

But also note just how much smoother these figures are.

Working backwards, you’ll note that the two HPI figures move in tandem: 1.3% and 1.2%, 2.8% and 2.5%, and so on.  In fact, the GTA-HPI increase is actually higher in the past two months than the 416.

But as you start to move into last fall, you can see how the numbers start to move apart.

Once you get into 2017, you’ll notice that the HPI in the 416 is has essentially increased at twice the rate of the GTA.

If you’re wondering why the April, 2019 416-HPI is higher than the “peak” back in 2017, then you need to watch the video above.  As I said, this is a less volatile figure, and some say a better measure of the market than the overall average sale price.

Some may disagree on that last point, and you can go as far as to suggest it’s cherry-picking data.

But you can’t disagree with the fact that the larger the data pool, the less volatility, and thus a month-over-month increase or decrease isn’t as reliable, and doesn’t paint as realistic a picture, as a year-over-year figure.  From that logic, it’s not unreasonable to suggest that the HPI paints a fair picture of the overall real estate market and it’s conditions.

Are real estate prices up 7.0% since April of 2017?  No.  But that’s not what the HPI is saying, so let’s be clear about the two figures, and what they demonstrate.

All in all, I would say that unlike in January and February when my feelings about the market were not backed up by the statistics, I’d say that these figures are exactly what I expected to see for April.

In case it’s not obvious already, I expect prices to continue to push upward into May, and even into June.

The post What Do The April TREB Numbers Mean? appeared first on Toronto Realty Blog.

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This is fun!

I think through twelve years and 2,500 blog posts, I’ve actually never written about this before.

We’ve probably talked about it indirectly, but in terms of the actual level of homogeneity that exists on a street, today’s blog will be a first.

Now for those not aware, the definition as we recall from Grade-9 science:

Of the same kind; alike
“Timbermen prefer to deal with homogenous woods.”
Synonyms: similar, comparable, equivalent, like, analogous, corresponding, matching, kindred, related

Okay, so they look the same.  You got it.  No explanation needed.

Now if you’re like me, your biggest fear actually IS being the same, ie. as another person.  I’ve never really wanted to “fit the mould,” and while I’m not exactly an outsider, I never aspired to conformity either.

But what about when it comes to your neighbourhood?  And your house?

Do you want to live in an area where the houses look similar?  Do you want them to look completely different?

Do you even care?

Very rarely will a new buyer-client describe their dream home and say, “I want a very homogeneous streetscape,” but it does happen from time to time.

What happens more often, however, is that once we’re out looking at houses, the buyer might say, “I don’t like the look and feel of this block as much as the last one.”  So while the buyer might not use the word “homogenous” and might not even detail that he or she feels this block doesn’t have the feeling of similarity, the buyer looks back at the last block, and compares.

And that’s really when the concept of homogeneity is most apparent.

You don’t really know, or realize, how homogenous a street is until you’ve compared it to another one.

And for many buyers, this doesn’t even dawn on them until they’re out looking at houses.

Once upon a time, the neighbourhood that everybody wanted to live in looked something like this:

Yes, that is literally “Pleasantville.”  As in, from the movie.

The only thing missing is a father coming home at 5:01pm, from the same job he’s had his whole life, to meet his two kids – one boy and one girl, and kissing his wife, who’s wearing a long, flowery dress, and who is waiting for the pot-roast in the oven.

Yeah, well, it’s 2019.

Even then, to be quite honest, those houses are far from identical.  And I think the difficult point I’m trying to make is that while many buyers desire a homogenous streetscape, they also don’t want houses to look identical.

Think about something like this:

That photo above accurately portrays the house that many of you live in.

But it’s almost unavoidable in many areas of the city.

Most areas north of Toronto, ie. Markham, Stouffville, Woodbridge, Kleinberg, et al, are built exactly like this.

And while I hesitate to use the term “sub-division,” because it has such a negative connotation, I think virtually every neighbourhood in the GTA started, at one point or another, as a sub-division.

So while I’m not trying exclude those of you who live in the areas described above, recognizing that many neighbourhoods are built to look the same, I wanted to talk more about the streetscapes as they pertain to the central core.

Because here is where the homogeneity is valuable to some, and not to others.

My office is on Merton Street, so I figured I’d take a look at two areas nearby: Leaside, and Davisville Village.

Leaside is known for having the “tree-canopied streets” like you might find in The Kingsway or other notable Toronto negibhourhoods, and it’s romanticized to a level that some support, and others ignore.  It’s also known for having a very homogenous streetscape, since the entire area was, believe it or not, built as a sub-division in the 1940’s.

Here’s a look at a row of semi-detached houses on Vanderhoof Avenue:

Note that there are eight houses pictured, and all eight look similar, if not the same.

All are semi-detached, all have the same widened-mutual driveway, and all are red-brick.

The first four houses all have the identical moulding above the front door.

So are these houses similar?  Or are they too similar?

Do you see any difference here between this streetscape, and the proverbial “sub-division” pictured above?

And do you care?  That’s the burning question I have today, because I honestly think that half of you, at least, will not care about streetscape.

So maybe those semi-detached houses are too similar.

Here’s a shot of detached houses on Fleming Crescent in South Leaside:

So there’s some variety here.

These are all detached houses, likely on identical 30-foot lots, all with private driveways.

But they’re not identical.  Different colour bricks, different roof shapes, different landscaping – there’s more variety here than with the semi-detached houses.

So is this something you covet?

Maybe you don’t even know.

Which is why, as I alluded to at the start, most buyers need a comparison.

Consider the detached house here on Hillsdale Avenue in Davisville Village:

On the left of this detached house, we have three “rowhouses,” although I would argue only the one in the middle is a rownhouse, and the other two are semi-detached.  But you get the idea – it’s a block of three houses attached.  On the right of this detached house, we have two semi’s (the second not quite pictured – it’s too horizontal a photo).

So does this streetscape look “worse” than the one in Leaside?

Again, do you care?

Maybe this house is better/worse than the others, but I’m trying to decipher whether or not you, the would-be buyer, puts a value on homogeneity.

Now what if our detached house wasn’t in between rowhouses and semi’s?

What if it was in between something else?

Look at this house, also in Davisville Village:

On the left of this detached house are two semi-detached multi-unit dwellings.

And this is very common in Davisville Village, where you have a variety of housing types and styles.

You might find a detached house next to a purpose-built triplex, whereas you wouldn’t find that on the east side of Bayview.

So do you value this detached house any less than the ones above, all things considered equal?

And here’s where the concept of “value” gets interesting, because if the subject property were identical in all of these cases, then we would be assessing value based on other houses around it.

Let’s look at one more:

Here we have, starting from the left, two semi-detached houses that look like that 1970’s/1980’s era, then a purpose-built triplex that’s ugly as hell, then an A-frame detached, then a 1 1/2 storey, then what looks like an A-frame bungalow but also might be a 1-1/2 storey.

How do you feel about this streetscape?

For those of you who were leaning toward the “I really dont’ care about homogeneity” side of the argument, do you still feel the same way?

Can you tell me, in all honesty, that if you picked up your dream home and put it down in the middle of this block that you wouldn’t care what surrounds it?

As you can tell from my tone, I believe there is a value to the streetscape, and I do believe that some level of homogeneity creates value.

How much value is the question.

Anybody have the answer?

The post How Important Is A Homogenous Streetscape? appeared first on Toronto Realty Blog.

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I write a lot about New York City on this blog; more than any other city in the world.

It’s not so much that I think Toronto is similar to NYC, but rather the comparison is apt.

Toronto is the biggest city in Canada, the most famous, the most multicultural, the most dynamic, and it’s the centre of commerce for the country.

I believe that if we looked south of the border, the same would be true of New York City.

They are also both, historically, the hottest real estate markets, and while Vancouver’s average home prices are higher, I just don’t see the same dynamic industry there as I do in Toronto.

I have actually only been to New York City twice in my life.  The first time, I asked my loyal blog readers what to see, where to do, and what to do.  I got more suggestions than I could handle!  But we did have dinner at two restaurants that were recommended to us, and saw some suggested sites too.

Despite not being a regular NYC-visitor, I remain obsessed with their real estate market.

Several times per month, I find myself looking up properties, and this week I was spying on the cheapest properties available in the city.

What I found, in addition to some very high prices, were an abundance of “room shares.”

On the Toronto MLS system right now, I found exactly one room share for a downtown condo.

On Realtor.com, which is the American version of the Realtor.ca that none of you use, because you’re all using Bungol, there are hundreds of room shares.

Let’s look at one of these examples:

14 Saint Marks Pl Unit 8C, New York, NY 10003
$1,395 per month

SRO (Single-room occupancy) dorm style studio unit with multiple shared hallway bathrooms on one of the most iconic streets in the heart of the East Village.  Available for immediate move in.  Impossible to beat this value! The unit is apx. 6 x 13 and comes with a fridge, microwave, and sink. Hallways and bathrooms were recently renovated. Bathrooms get cleaned by building staff 2x per day, and with 3 per floor there is never a wait!  No short term leases. Guarantors accepted.

This room is 6 x 13.  That’s 78 square feet.

It’s basically a bed that’s raised above a space below where you could put a couch, a desk, or both.

The bathrooms are common, down the hall, like in a university residence.

There is a fridge, microwave, and sink.

I like how they feel the need to specify a sink.  Thank God there’s running water, right?

This is a whopping $1,395 per month USD, or $1,885 per month CAD.

And it’s in the heart of “Noho,” which, despite my old-man demeanour, I have actually heard of…

That place might have been a bit depressing, but it’s location!

How about this one:

2118 3rd Avenue, New York, NY 10029
$1,395 per month

This listing is for a private furnished room professionally managed by Big Apple Living. For students and young professionals. The building is a gut renovated former beer factory with exposed concrete, open space, and soaring windows in the heart of Williamsburg!You will share a kitchen, bathroom, and living area with other vetted roommates. All vetted by our team at Big Apple Living. Utilities are additional $100/month (Includes: Electricity, WIFI, cable, gas, heat, water)

Okay, now we’re cooking with gas!

Beautiful apartment!  Looks like something out of a magazine!

And yet again, as you can see from the photos, and read from the description, this is a “room share.”

Unlike the first property, this has a beautiful living room, kitchen, and common area.

I know it’s literally like being back in university, but what other solutions to we have to solve a rental problem, aside from giving away free housing, or printing money, or anything else the naive and uninformed would suggest?

Yes, it’s a room.  People would rather live in their own apartment.  But it’s $1,250 per month in New York City.

Oh, and why is it so nice compared to the first listing, yet cheaper?  It’s in East Harlem.

Let’s look at one more:

2284 7th Avenue, Unit 2, New York, NY 10030
$1,253 per month

This listing is for a private room in a shared apartment professionally managed by Bedly. You will share a kitchen, bathroom, and living area with other vetted roommates. All Bedly renters go through a background check and application process. We offer over 600 rooms across metro NYC & Boston.  Bedly rooms come fully furnished with utilities, WiFi, and 2x monthly cleaning included. To move-in, we collect first month rent, last month rent, and a one-time membership fee. The apartment is in a newly renovated building 7th Ave, aka Adam Clayton Powell Blvd in between West 134th and 135th street.  This is a single room in a four-bedroom, 1.5-bathroom apartment located on the second floor of a walkup building. The apartment is spacious and modern with hardwood flooring and exposed brick throughout. The unit features an open kitchen, and living area / dining area with a dining table set and sofa. All common space is shared with two other renters. The bedroom is furnished with a full-size bed and side table. The room has two large windows overlooking the neighborhood and it has finished wood floors with off-white painted walls, bright white trim and one exposed brick wall. The room also includes a standard closet for extra storage.

So now you get the layout, right?

A university dorm, but for adults.

But how many places do you think a person can find to rent in New York City for $1,253 per month?

The downside here is obvious, and no, I don’t mean sharing.  I mean trusting “Bedly” and “Big Apple Living” to actually vet potential roommates, not to mention solving disputes, and providing a safe living environment.

But you have to admit there is something here.  And while it’s not glorious living, I think providing renters with an option, is better than not.

There are room shares here in Toronto, but not in abundance, and not on Realtor.ca.

So do you think Toronto is ready for this?

Do you think the City of Toronto would stand in the way of progress, or at least try to over-regulate and tax the hell out of this?

Do you fear the big, bad landlord more than you value innovation?

Or are we all just back to wishing the government would build 100,000 condos and give them away for free?

In lieu of fantasy, and for those brave enough to acknowledge reality, this city is growing at an unsustainable pace, as are real estate prices.

Innovative housing solutions are needed, and taking a cue from New York City and others around the world isn’t a terrible idea…

The post Does Toronto Need More Innovative Housing Solutions? appeared first on Toronto Realty Blog.

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When it comes to real estate, you can almost guarantee the old adage, “if it looks too good to be true, it probably is” remains on point.

On Tuesday morning, a client emailed me about a massive price reduction on a property we had seen together, and ultimately rejected.

It sounded bizarre to me.

The property, previously priced at $1,388,000, was now at $1,090,000.

My client said, “Either they’re desperate, or there are issues with the building.”

I would have thought the exact same thing, but this didn’t smell right to me.

Now ordinarily, I would merely assume this is the old, “If I can’t sell it for what I want, I’ll reduce the price to something stupid-low, then hold an ‘offer night’ and hope people line up to bid.”  But in this case, there was a reason why this absolutely, positively, couldn’t be the case: the building was a commercial property.

You have read oh-so-many blogs by now about the stupidity on display when an agent, with a stale listing at, say, $1,500,000 for three months, decides to list at $1,199,900, with an “offer date,” in hopes that clueless buyers will flock to the listing to bid, without noticing that the property was just for sale for $1.5M.

As you’ve read, I don’t believe that the “list low, hold back offers” strategy can work after you have already listed at your target price.

You can try that strategy first, but once you set the price at your target, fair market value, or both, the price is already out there!  Buyers know!  Agents know, and you can’t undo what you’ve done.

But alas, people try.

And that gives us blog posts like this one from March: “Another Bright Idea”

So in the case of this commercial property, I was forced to assume that it was reduced in price by $300,000 because it was a fire-sale.  There was no other explanation.

In the wide-world of stupidity that we live in, there’s no way a seller of a commercial property, and/or the listing agent, could misunderstand the market so much that they think this doomed-to-fail strategy in the residential market, could work in the far-tougher commercial market.



I looked up the listing, and in fact, there is an “offer night.”

I shook my head so hard it actually hurt.

This just demonstrates how many people don’t understand the “list low, hold back offer” strategy.

Because for this to work, what do you need?

What is the one thing that must be present in order for this strategy to work?


It’s demand.

More specifically, a deficit caused by a disproportionate amount of demand, in relation to supply.

If you take a $1,000,000 house and price it at $799,900, you may end up with 12 bidders, and you may very well sell for $1,050,000 as a result of all that action.

But that’s because of three things:

1) It’s a house.
2) It’s an under-priced house.
3) Houses worth $799,900 to $1,000,000 are lacking in supply, in relation to demand.

How many of those things are present in the case of our commercial property described above?


Well, to be fair, maybe point #2 applies.  This property is worth more than the $1,090,000 list price, no doubt.

But how much is it actually worth?  What would somebody pay?  How quickly should it sell?

Those are all questions that are not nearly as easily answered in the commercial real estate market as the residential market.

And so to see this “strategy” employed is just mind-boggling.

The demand for run-down, over-priced commercial properties with massive design flaws just isn’t there right now.  So to think that you can under-list this property, hold an offer date, and have any modicum of success is so incredibly misguided.

On Tuesday, I also saw a freehold listing that was listed, oh, well, a wee bit low.

When you see a 4-bed, 7-bath house that looks like it’s just shy of $2 Million suddenly listed for $1,389,000, you sort of take notice.

And that’s exactly what happened when I saw this property on MLS.

“What……..the eff……….are they doing?” I wondered.

I mean, why just under-list when you can super-duper-under-list?

Check out the listing history here:

So they came out at $2 Million and that didn’t work.

They came back out at just shy of $1.9 Million, and that didn’t work.

So now comes the “fail-proof” plan that everybody thinks is going to save the day when they refuse to accept that they are over-priced: list low.



If I could describe what they’re doing in a poorly-animated gif image, I think it would look something like this:

Yes, that’s right.

The Kings of Crunk themselves, it’s Lil’ John and the East Side Boys with their epic 2002 hit, “Get Low.”

Get Low, Get Low, Get Low!

Oh, they got low alright!

They dropped the price $500,000 from $1,879,000 to $1,389,000.

Now that’s low!

But what in the world is the expectation here?  Do the sellers think that people are going to see the house at $1,389,000, fall in love, and tell their agent, “I simply must have this house.  I’m wiling to pay a half-million-dollars over the listing price for it”?

There’s just no way.

In fact, don’t tell Lil’ John this, but there is such a thing as “too low.”

Now that the property is at $1,389,000, who is going to see it?

Buyers looking for $1.4 Million?

Buyers looking under $1.5 Million?

Are $1.9 Million buyers actually going to see this house?  I mean, presumably, they’ve already seen it, and disregarded it.  But even if they did see it at $1,389,000, are they going to be enticed by the opportunity to get involved in this mess?  I just don’t believe there’s a buyer out there in this price point that’s going to say, “That looks like fun, I think I’ll join the fray.”

Maybe this sounds like arguing out of both sides of my mouth.

Maybe when I describe the $1,000,000 house being listed for $799,900, with 12 bidders showing up, resulting in a $1,050,000 sale price, that to suggest this detached house above dropping the price $500K is a poor strategy, is hypocritical.

But it’s not.  You simply have to see the difference.

I can’t stress this enough – you only get one chance to show the market your price, and if you come out high, and then decide to price low and try to hold back offers, you’re screwed.  It’s not going to work.  I’ve seen it work a few times, in fact, one of my colleagues did this and I laughed when it did, but ninety-nine times out of one-hundred, we get what I wrote about in the March, 2019 blog post linked above.  The house doesn’t sell, then the price is raised again, then maybe even lowered one more time, and it goes on, and on, and on.

This ridiculous $1,389,000 listing is going to be terminated, mark my words.

Because do you think the sellers will take, say, $1,650,000 for it?  Not on your life!  Not after we saw them out just shy of $1.9 Million.

But you’re also mistaken if you think that when the highest bid comes in at $1,650,000 on their even more ridiculous “offer night,” that the listing agent and seller won’t talk down to the bidders, as if to say, “Ha!  This house is worth more than that, you dummy!”

You can’t have it both ways.

You can’t fail miserably at selling the house at your price, then drastically under-price, get bids that aren’t in line with your expectations, and then point the finger at the buyer pool.

The $1,389,000 price was too low, and in my opinion, taken from thin air.  It serves no purpose, has no strategy behind it, and is just too damn low.

Now what if the price were even lower?

What if the price were……………..one dollar?

Have you seen this before?  I’m sure you have.

I’ve gone on record saying that this doesn’t work, but let me now put some stats in front of you just to drive that point home.

In the past two years, there have been 19 freehold properties listed at $1 in Toronto.

Guess how many of them successfully sold?

No, it’s not zero.

I think that’s what many of you were thinking.  Or hoping.

It’s six.

See below:

Now of those six properties that sold, however, there are some caveats.

One of them sold for $1, which is obviously not what happened.  Properties just don’t sell for $1.

Two of the properties above, in the same area, next-door to each other, were being sold by a commercial firm that routinely lists on MLS, while simply putting the properties out for tender.

One of the properties was sold as part of a portfolio sale, again, by a commercial firm.

So that leaves only two actual residential properties, sold by owners who live in the homes, that were successfully listed at $1, and sold.

Two residential properties, in two years, in all of Toronto.

So the next time you hear somebody – at the water cooler, at your aunt’s birthday, or in line for beer at the Blue Jays game, talk about “listing for one dollar,” you can sleep easy knowing that you’re not missing out on the next ingenious real estate fad.

Despite what some folks will say, pricing real estate is still a skill, and one that few in our industry possess.

To know what a property is actually worth, and to understand how a property could be under or over-priced to maximize potential sale value, is a tremendous asset in this market.

The two examples described above – the commercial property, and the house reduced by a half-million-dollars, are fantastic examples of where the “list low” strategy is misunderstood, misused, and fantastically misplaced.

Can’t wait to write a follow-up to this disaster-in-waiting in a few months…

The post Can The “List-Low” Strategy Backfire? appeared first on Toronto Realty Blog.

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