The Toronto Real Estate market has been moving along quite smoothly for the past decade with most houses located in “demand” communities in Toronto’s East, Central, and West Ends performing quite well year over year (you can read more about Toronto’s various neighbourhoods here). So let’s have a little discussion about paying over asking and what List Prices actually mean.
You see agents advertising “Hire me!! Look, I got my clients over asking! I’m so amazing!!” Don’t believe the hype folks, go ahead, pay over asking. The more important figure to pay attention to is market value, not asking price. Most asking prices are so ridiculous, they may as well be a dollar. What is Market Value you ask? Simple: How much have comparable properties sold for in recent history…that’s the question you need to ask your Realtor (hopefully you’ve chosen a Spring Realty Realtor). When you look over recent comparables you’ll find the spread between what the agent is boasting about, and reality to be much less dramatic.
Here’s a screen grab of a recent sale in Toronto’s East End. WOW 26% over asking, that’s crazy! Well, not so crazy because when you look at recently sold comparable homes in the area and then analyze purchase patterns of buyers, you’ll notice that similar properties have all sold for within 1-3% of this final sale price. Much less dramatic don’t you think? You may ask: “Why don’t they just list it at a higher price?” Basically, some agents believe that if they list it really low they will attract more offers and drive up the final selling price. You’ll definitely get more offers, the problem is 1/2 of them usually have no business being in the game to begin with. I personally think it creates a lot of unnecessary chaos and wastes a lot of people’s time. Not always the best strategy. I believe listing the property closer to where you want it and then allowing an appropriate amount of time to market the property will get you across the finish line with a lot less stress.
Listen, I get that it’s tough to not get emotional and defensive when in this situation. Nobody wants to be taken for a ride and everyone wants a deal, that’s normal. What we’re really good at here is stripping away the unnecessary layers of BS and focusing on the real numbers. Focus on the numbers, and decide whether this place can be your home for the long term and you’ll be fine. So go ahead, pay over asking just keep an eye on Market Value to guide your decision. Happy shopping!
Interested to learn more about the buying process? Read the Worlds Greatest 1st Time Buyers’ Guide or if you’re more interested in making your first Real Estate Investment, read our Worlds Greatest Investment Property Guide. Make sure you connect with us on Facebook and Twitter too, we have lots to say!