Aspiring buyers in Toronto’s real estate market in May were contending with prices about 15 per cent higher than they were last year at this time.
No wonder bidding war fatigue is beginning to permeate the market.
Some agents and buyers are wilting, Richard Silver of Sotheby’s International Realty Canada says.
Multiple offers seem to be lessening – not due to lack of interest but due to a lack of desire to compete and push the price too high,
According to the Toronto Real Estate Board, the average price jumped to $751,908 in the Greater Toronto Area in May to mark a 15.7-per-cent increase from the same period last year. Throughout the spring market, prices were inflated as the increasing amounts above asking seemed to swell each week.
In one jaw-dropping example, an east-end semi-detached, recently listed for $799,000, sold for more than $1.1-million after the buyer offered a premium of $313,212.
The average price of a detached house in the 416 area code jumped to $1.28-million last month.
Sales swelled 10.6 per cent to mark a record for the month of May. Listings, meanwhile, sank 6.4 per cent in May compared with May of 2015.
While some potential buyers are worn down, others are changing tactics.
Shawn Lackie of Coldwell Banker R.M.R. Real Estate says the game is changing on a regular basis. He recommends that buyers who expect they’ll face competition on offer night might try being first at the table instead of the last.
Many agents aim to be the last in because they want to suss out the number of rivals first. Often, they will tack more onto the offer with each additional party in the lineup.
His enviable grasp of technology and social media has made Silver a sought-after speaker on the use of social media in real estate. “I welcome change,” he says. “In fact, the only constant in our real estate business is change.”
By Dennis McCloskey
When Richard Silver walks into the boardroom at Sotheby’s International Realty Canada’s Toronto office, the veteran Realtor exudes confidence, charm and class. The casually but nattily attired agent immediately puts his visitor at ease.
No one would deign to call the former model, dancer and performer a show-off. But Elton John might disagree, because Sir Elton says, “Performers are all show offs; unless you show off, you’re not going to get noticed.”
Richard Silver is getting noticed!
Three years after joining Sotheby’s Canada, with its 400 agents and offices in 30 residential and resort markets, Silver is consistently among the top one per cent of salespeople in Toronto. He was named one of the Top 100 Most Influential People in Real Estate for 2013 by San Francisco-based Inman News.
Born in Edmonton, he obtained a Bachelor of Science degree from the University of Oregon by majoring in phys ed and kinesiology. A professional dancer and performer, he moved to Montreal 40 years ago before accepting a job at Toronto’s York University, teaching dance. Soon he returned to performing.
When he was interested in buying his first house he took a real estate course “to learn the process.” He was hooked. He obtained his licence in 1980 and knew he’d made the right decision to enter the business when he earned the same income in the first month as a real estate agent as he did working as a dancer the entire previous year.
I gave up performing and became a patron of the arts,
he says with a smile. In early pre-technology days, he says everything was done by hand, phone, fax or in person. He laughs at the memory of buyers and sellers having to send him a telegram to confirm an Agreement of Purchase and Sale. Thanks to a tech-savvy pre-teen nephew, who is now in his 40s, Silver became an early adaptor of technology when his nephew wrote a rudimentary customer management system that allowed Silver to connect with clients and keep track of his business. Again, he was hooked!
Today, his enviable grasp of technology and social media has made Silver a sought-after speaker on the use of social media in real estate:
I welcome change. In fact, the only constant in our real estate business is change.
Before joining Sotheby’s, Silver worked with other real estate companies, including 15 years with the venerable Toronto firm, Bosley Real Estate, founded in 1928. He says he learned a lot from Tom Bosley, broker of record, and his wife Ann, but several years ago Silver felt the time had come to join an international franchise:
At first, I didn’t think foreign markets would be of interest to me, but I began seeing more and more showings and offerings from Chinese agents,
He knew there are five Chinese areas in the Greater Toronto Area (Gerrard, Spadina, Town of Markham, Scarborough and Mississauga) and took notice of a large influx of Mandarin- speaking people in the city, including Cantonese from Hong Kong. “China’s middle class has a population of 300 million and they have money to spend.”
He soon realized he needed an understanding of foreign markets, so he obtained his Certified International Property Specialist (CIPS) designation.
Silver adheres to the axiom that happiness and success come from growth, not comfort. And since he loves nothing more than a challenge, he chose to reinvent himself and forge a new path, deliberately and with foresight. He formed a team of several specialists, including Jim Burtnick, broker and senior vice president, sales; Tracy An, who is Asian and serves as translator; and Sherille Layton, British by birth and a recent immigrant with full knowledge of the immigration process. Silver says his team concept is to find people who are not like him but who complement m:
Too many people look for mini-MEs.
He concedes there is much to learn when dealing with foreign markets and he recommends a book by Terri Morrison, titled Kiss, Bow, or Shake Hands, which is a guide to proper international business protocol and includes 60 country profiles.
Silver agrees it can be a cultural and technological shock marketing a property within China. He speaks only rudimentary Mandarin and Cantonese, mostly in the form of greetings and very light conversation. Silver says the most important challenge in dealing with a Chinese buyer or seller is patience:
It is important not to be shocked or insulted by an extremely low offer. Negotiation is uppermost in their mind and if a buyer likes a property, they’ll most likely buy it. Just be patient.
Sotheby’s is considered to be a “rarefied” brand and Silver likes to call it “a marketing company that sells real estate.” He estimates that 30 per cent of his sales are to the Chinese market. He says it is important to make at least one annual trip to China to create and maintain working relationships with people, but it’s a challenge to get through the Great Firewall of China via the Internet:
It takes an innovative approach and commitment to attract Asian buyers because China has no Google, Facebook or Twitter.
Among his “workarounds” (and keeping in mind the 12-hour time difference), his team uses China-based real estate website Juwai, and China’s most popular instant messaging app, WeChat.
At 67, Silver has no plans to retire just yet. While he does not rule out another re-invention at some point in his real estate career, he says:
My intention is to work as long as I can because I love it.
He and his partner of 18 years like to travel the world and spend time in Puerto Vallarta “for its bright, long, sunny days, the Mexican culture and the ocean.”
There is one thing he does not like and he states it unequivocally: “I don’t like Canadian winters!”
A century-old detached house in Toronto’s emerging Leslieville neighbourhood recently sold for $1.04-million, $140,000 more than the asking price of $899,999.
From these numbers alone, anyone who has recently tried buying real estate in Canada’s largest city will know why that happened: a bidding war.
With the Leslieville example just the tip of the iceberg, bidding wars are now common practice in Canada’s housing market and represent a significant challenge for house shoppers who are either entering home ownership or moving up.
“Like it or not, bidding wars have become a part of the real estate landscape in hot real-estate markets worldwide,” says Judith Hanley, a sales representative with Re/Max Realty Enterprises Inc. brokerage in Oakville, Ont. “They represent a high-drama, high-stakes game with only one buyer and a seller who wins.”
The Canadian Real Estate Association reports that sales of existing homes rose by 8 per cent in February compared to the same month a year earlier, while the national average home price soared 17 per cent.
Driving the upward trend are Toronto and Vancouver, where bidding wars have sparked a buying frenzy that shows no signs of abating.
In Toronto, the average price of a detached house topped $1.2-million in February. In Metro Vancouver, the average selling price of a single-detached home rose to $1.83-million in January, a year-to-year increase of 40 per cent.
Bidding wars are responsible for pushing prices up, often above what a home is worth, experts say. They have turned buying a home in Canada into a game of nerves.
Canada has few checks and balances in place for regulating bidding wars. Often buyers don’t know who they are bidding against and if the other offers are legit. Phantom offers are a big enough problem that last summer the Ontario government instituted new rules requiring listing agents to keep on file written bids and counter bids in an effort to create more transparency around the the bidding war process.
“Sometimes a property is underpriced [intentionally] and will sell for more than asking, and that sadly has become a marketing tool, allowing the seller and agent to say that they got over asking,” says Richard Silver, an agent with Sotheby’s International Realty in Toronto.
Buyers willing to enter the fray need to know that bidding wars are a lot like gambling: The odds are usually stacked against you.
“The outcome can be unpredictable,” says Leslie Cannon, a Vancouver realtor who has guided many clients through bidding wars in her city’s highly competitive housing market.
Among them is the would-be homeowner who last fall became entangled in an 11-way bidding war that ended up pushing a property $1-million over asking.
“The house was listed around $2-million and I advised my client to offer $2.3-million, which we thought was a pretty generous offer,” says Ms. Cannon. “But then someone, who obviously really wanted the house, went as high as a million over asking, a price that the seller found hard to resist.”
Moral of the story? Money really does talk.
Fortunately for house shoppers, there are other ways to come out on top that aren’t so dependent on the number of zeros at the end of the offer. Some sellers will choose a lower-priced bid over a higher one, for example, if they have a particularly strong emotional attachment to their home. That’s when having a strategy is key.
For Shawn Lackie, a broker in Ontario’s Durham region, that strategy involves often visiting the sellers to discover first-hand their history as it pertains to the home. “I make sure to at least have a chance to present [the offer] in person,” Mr. Lackie says. “I am trying to create a connection, to find out if the sale can go beyond money.”
He then shares that information with his client to use as fodder for winning a bidding war. The personal touch worked for a client wanting a house in Oshawa, Ont., with multiple bids. The seller chose him over other contenders who wanted to renovate because he had made it known that he loved the house as much as the seller did. He would live in it as is, which is what the homeowner had wanted to hear.
“Price is often the biggest motivator but anything we can do to make our offer stand out we’ll do,” adds Ms. Cannon, who similarly meets with sellers to gain information that might help her clients seal the deal.
In Toronto, Mr. Silver makes it his business to know the market and advice his clients accordingly.
When it comes to bidding wars, he says it is important to determine “what is true value and what is ego-driven.” If a client wants to buy a house just to win the contest then, in Mr. Silver’s opinion, that’s the wrong reason to stay locked in a bidding war.
“You will never overpay for a house that you love,” he says.
“If the value is there and you don’t put in your best offer, remember that the next time a similar house comes to the market, its price will be based on what you chose not to pay and you will have to pay even more for the next.”
As if buying real estate right now wasn’t emotional enough.
I was recently interviewed by Ray Wood for the Top Agents Playbook. It was a great opportunity to share some of my experiences with using technology in the real estate business. As many of you know, I'm a big fan of new technologies and I enjoy testing them and implementing to make our work more efficient and to often more enjoyable and fun.
I have written about drones, apps and gadgets before and I plan to continue doing so, seeing how new stuff comes out every day and there is always something fresh and exciting to try out.
Meanwhile, you can check out Ray's website and listen to the interview here.
Richard talking about marketing to international buyers and sellers and how to ask the right questions to set yourself up for success.
Nobu: Toronto is one of those cities - when it comes to marketing to these international buyers and sellers, what is the first step? People want to get into that, but don't know how to do it.
Well, the first is to go to conferences. That's a big help. I mean, coming here to this conference and meeting lots of people from around the world, I've made quite a few connections.
I have my CIPS, which has been very very good - the certified international property specialist. I think that's a great course to take and during the process of taking that course, you get to meet a lot of people. And they all have information to share about the countries they live in and it's just great ammunition when you're dealing with a foreign buyer. You have to know where they're coming from, how business is dealt with and it just helps you set up your business.
Nobu: So Power the Network, Power the People sort of thing.
Yes exactly. And ask questions! Find out what's happening in your market place, how do people buy, are there property rates.. Most people are surprised to know that Canada and the US have wonderful property rates, that don't really exist outside of North America.
Nobu: And it's not only that. It's also the cultural differences.
Yes, that's a lot of fun. Kiss, bow and shake hands is probably about the best buyable you can have for any person who wants to work with a foreign community. Because it explains the cultural things. And it's a real challenge. You need a lot of patience. But you also need to find out the information, you need to find out how properties are sold, whether they're sold with furniture, without furniture... How to greet somebody, how to offer them your card, what is the sign of respect.. Also, even when it comes to financing, there are certain countries where it is considered to be a sin to borrow money. You mention financing and they're horrified.
Nobu: And setting those expectations is important. Do you do that in marketing to those folks, or is more of a face-to-face kind of conversation you have with them?
You know, little bit in my marketing. As you know I do a lot of video, so I make sure that my videos are transcribed and that they can be easily translated into different languages. And I do talk about the diversity and the cosmopolitan nature of the city that I'm working in.
We're very lucky in Toronto, it's like a lot of big cities, there are areas that are totally to one culture, to another culture and it's an absolute joy to be able to put a deal together when you're dealing with two opposites sides. Not only are you dealing with money issues, but you're dealing with things like how to win and what is a win for somebody in one culture, may not be a win for somebody in another culture. It's very interesting.
Nobu: How as an agent am I going to, asside from the network, asside from the Youtube, the videos, the transcripts, is there a first step for you? Do you have a website that speaks Chinese?
No, but I have a website that's friendly with Google and can be translated. And I work for Sotheby's and Sotheby's is in about 16 different languages. Our website is totally translatable, you can view it in a number of languages. And I think, as things transpire in the next couple of years, I'll probably add landing pages to my website that are in different languages completely. So that somebody can get in, get the information translate and see.
Nobu: So really it's about knowing the power of your networks, powering your brand and connecting that with technology that's out there.
Yeah. And also you know it's interesting, I treat a foreign buyer or seller, as if they're first timers. And I don't assume anything. I talk to them about what MLS is and how it works. And how Buyer Representation works, and you know what to do or how to deal with funds. I mean, funds are a big issue. And a lot of agents will go out and spend lots and lots of time working with people to find out that the funds are somewhere in the Far East and it's going to take them 6 months to get here. So I always try to connect with my clients and say: "Please, first thing we got to do is we got to get your funds on shore. We've got to get them here, to North America. We've got to get them into a bank here." And that's a big step. That's one of the first things I would tell people. Make sure you have funds and also just see if there's option for them for financing, if they need it.
August 26, 2011 -- As one of the world’s most diverse cities, Toronto welcomes nearly 100,000 newcomers to Canada each year. These people have chosen Toronto to begin building a better life. A report released recently by CIBC World Markets confirmed that the reasons for embracing Toronto are well founded.
The report assessed the performance of Canada’s largest cities in the first quarter of this year, and while Toronto didn’t come out on top in any individual category, the cumulative effect gave Toronto top position in the report’s ranking of Canadian cities.
A total of 7,992 homes changed hands in July, representing a 23 per cent increase over the 6,564 sales from a year ago. While sales were robust in July, it is important to note that the sharp increase is relative to July 2010, when higher lending rates, new mortgage regulations and misconceptions about the Harmonized Sales Tax dampened activity.
Including July transactions, there have been 55,863 transactions so far this year, within 1.3 per cent of last year’s performance. Total sales for the year are expected to move above the 2010 total by the end of August.
Sales activity in the 905 Region outpaced that of the City of Toronto last month, with year-over-year increases of nearly 25 per cent and 21 per cent respectively.
The amount of time it took to sell a home, on average, declined compared to last year. Homes that sold this past July were on the market for an average of 26 days – down by 21 per cent from an average of 33 days a year ago. This decline in selling time is largely due to a dip in listings in comparison to last year. Less supply has led to more competition amongst home buyers, which has decreased the decision time for offers.
Tighter market conditions continued to drive strong annual growth in the average selling price. The average price of a resale home in the GTA increased by almost 10 per cent year-over-year to $459,122. Gains were slightly stronger in the city’s surrounding area, with the 905 average price climbing 11 per cent to $448,612. The average price in Toronto increased seven per cent to $475,717.
Jason Mercer, the Toronto Real Estate Board’s Senior Manager of Market Analysis suggested that market may become more balanced in the second half of the year: “We did see some year-over-year improvement in new listings in July, but sales continued to grow at a faster clip. As we move toward the end of 2011 and into 2012, expect more households to list their home for sale, prompted by the strong price growth reported during the first half of 2011.”
Homeownership remains affordablein the Greater Toronto Area. Low mortgage rates and steady income growth have kept homebuyers confident in their ability to purchase and pay for a home over the long term. This is why the number of transactions and the average selling price has continued to grow. However, some of our REALTOR® Members serve consumers in the City of Toronto putting their clients at a disadvantage. Consumers could be doing even better with the repeal of the backbreaking and unfair upfront costs brought about by Toronto’s additional land transfer tax. Mayor Rob Ford has promised to do away with the tax. All Members of the Toronto Real Estate Board, especially residents in the 416 area code, look forward to the fulfillment of this promise.
With the recent volatility of the financial markets, the strength of home ownership has become a great topic for discussion. Variations can occur but your home is where you enjoy your family and friends. Living in the Greater Toronto Area is a very wise long term investment with lots of options in terms of housing type and neighborhoods.
Richard Silver is President of the Toronto Real Estate Board, a professional association that represents 32,000 REALTORS® in the Greater Toronto Area.
When it comes to government policy, business people and the general public don’t always see eye-to-eye; but when they do, there is even more reason for politicians to take notice. That is why GTA municipal representatives would be well advised to pay close attention to the results of a recent public opinion poll, conducted for the Toronto Real Estate Board, on municipal finance issues.
The poll, conducted by Ipsos Public Affairs, found broad public support for numerous issues that have long been supported by the business community, including reduced taxation, better fiscal management of taxpayer dollars, prioritizing municipal services and innovative options to deliver these services.
It is not a surprise that the poll found support for reduced taxation. After all, there are not many people, or businesses, that like to pay more taxes; but, on specific taxes, the poll did find some interesting results, especially with regard to the Toronto Land Transfer Tax, which Toronto Mayor Rob Ford has promised to repeal. According to the poll, an overwhelming majority of Torontonians, 75 per cent, support the Mayor’s commitment to repeal this tax. Interestingly, the public’s support to repeal this tax remains strong, at 68 per cent, even when they were asked to consider this pledge in the face of the City’s expected, and large, budget shortfall.
As business people, REALTORS® understand that the Toronto Land Transfer Tax is an unfair tax that hurts the economy. This tax is paid by homebuyers and businesses when they purchase a property, and is charged on top of the provincial Land Transfer Tax. It costs the average Toronto home buyer over $7,000, and when added to the Provincial Land Transfer Tax, average Toronto homebuyers face almost $14,000 in land transfer taxes.
The housing industry is a key creator of jobs and spending. In fact, a recent study conducted by Altus Group Economic Consulting for the Canadian Real Estate Association found that the average housing transaction in Ontario generates over $40,000 in spin off spending on things like furniture, appliances, renovations and financial and legal services.
Unfortunately, Toronto’s Land Transfer Tax threatens the economic stimulus that comes from a vibrant real estate market. A study conducted by the C.D. Howe Institute found that Toronto’s Land Transfer Tax caused a 16 per cent reduction in re-sale housing transactions when it was first implemented, which, at the time was estimated to cost Toronto’s economy approximately $200 million in consumer spending.
For these reasons, REALTORS® are encouraged that the Ipsos poll showed such strong support for Mayor Ford’s commitment to eliminate this tax.
REALTORS® were also encouraged that the poll showed public support for numerous other municipal finance issues that have long been a focus of the business community, namely better municipal fiscal management, prioritizing municipal services, and considering innovative options to deliver these services. In this regard, the poll found an interesting contrast between the City of Toronto and the rest of the Greater Toronto Area. According to the poll, only 45 per cent of Torontonians believe that their municipal tax dollars are being spent efficiently. In the rest of the GTA, satisfaction is much higher at 72 per cent.
Interestingly, the City of Toronto has begun a review of its services which could go a long way to addressing these public concerns, which have also been shared by the business community for years. Undoubtedly, this process will require some difficult decisions by Toronto City Council. According to the Ipsos poll, the public appears to be ready for some of these decisions. Specifically, the poll found that,
79 per cent agreed that downsizing of City staff through attrition should be considered;
79 per cent agreed that more public-private partnerships should be considered;
77 per cent agreed that contracting out selected services should be considered;
76 per cent agreed that pulling out of or eliminating some City agencies should be considered;
68 per cent agreed that imposing or increasing user fees should be considered; and,
59 per cent agreed that reductions and/or discontinuation of some services should be considered.
As business people, when it comes to government policy, we can sometimes find ourselves trying to convince not only the government of our viewpoints, but also the public. So, it is extremely encouraging when we see eye-to-eye with the public on government policy. Clearly, when it comes to municipal finance issues in the GTA, businesses and the public are speaking with one voice.
Over the past three years the Toronto Real Estate Board has been involved in a major rewite of our database to provide for Neighborhoods instead of alpha numeric designations. This was launched on July 5th. Here is an article by CAROLYN IRELAND of the Globe and Mail. Please note: there is a mistake in her report. Cabbagetown does exist as one of the neighborhoods.
Toronto— From Friday's Globe and Mail Published Thursday, Jul. 28, 2011 11:27AM EDT
I am excited to begin my term as President of the Toronto Real Estate Board, and so I would like to take the opportunity to discuss with you the issue of home ownership.
The first time home buyer land transfer tax (LTT) rebate is out of date. Due to increasing home prices, the rebate no longer covers the average LTT bill for first time home buyers. Instead, they pay almost $1,500 in LTT after receiving the rebate.
The provincial LTT is a significant tax: it costs the average Toronto home buyer almost $7,000, and when added to the Toronto Land Transfer Tax, average Toronto homebuyers face almost $14,000 in land transfer taxes.
REALTORS® believe that the first time buyers of today should not have to bear a heavier tax burden then previous generations. We believe that affordable home ownership is as important in 2011 as it was in 1996 when the LTT rebate program was first introduced.
From 1996 to 2010, the average price of a resale home in Ontario went up 120 per cent from $155,725 to $ 342,245. During the same period, the provincial government increased the LTT rebate by $275 or just 16 per cent. As a result, a first time home buyer today in Ontario pays $1,500 in LTT more than the previous generation on an average priced home after receiving the rebate.
REALTORS® are therefore urging all candidates running in the 2011 Ontario Election to support increasing the LTT rebate for first time home buyers from $2,000 to $3,500. This would return fairness to the LTT rebate program and allow present day first time home buyers to enjoy the same tax savings as buyers in previous years.
The Ontario LTT is paid on top of other closing costs such as legal fees, moving expenses, home inspection fees and mortgage insurance. Together, these closing costs eat away at a purchaser’s down payment, increasing the size of their mortgage principal.
The tax punishes young first time home buyers in particular because they pay the majority of their closing costs out of their own pocket, not from the proceeds of a previous home sale. As a result, closing costs, such as LTT, prevent some first time home buyers from entering the market altogether.
As a working REALTOR® I know the dream of home ownership among young Ontarians is as strong as it has ever been. Returning fairness to the LTT rebate program will go a long way towards ensuring that dream continues to flourish.
I look forward to providing knowledge and insight on important real estate subject throughout my term.
Richard Silver, President Toronto Real Estate Board
Reposted from The Toronto Sun
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