The Quickest Way to Get into the Market

Published on 17th July 2019

Trying to get into the market? Having a hard time? Let me tell you my secret to the quickest way to get in!

Running Rampant – This is a common issue that is running rampant in Toronto. Owning real estate has become a luxury at this point. Currently, the average cost of real estate is about 14 times that of the average gross income earned in Toronto. Yes, you heard me right, 14 times!! It has dramatically increased in the last 10 years. Back in 2009, the average price of real estate was just a bit shy of 6 times that of your gross income. Crazy how times have changed, not to mention the increased difficulty of getting a mortgage these days.

So if you’re on the outside looking in, then how do you get into this so-called “cool club” of owning Toronto real estate?

Part Unknown, Part Stigma – Well the answer is actually quite simple and I don’t understand why more people don’t use it. It could be a combination of people not knowing or maybe there is some sort of stigma with it. Nonetheless, the answer is buying with 5% down.

Yes, you heard me right – you can still buy with 5% down payment right now. Here are the requirements:

  • You must purchase this property for personal use;
  • 5% down payment is valid for up to $500,000; and
  • All amounts over $500,000 will require 10% down

Slow Savings – So why is this the quickest way to get into the market? Well, it’s simply because it requires the least amount of upfront cash that you need to save up for. The biggest challenge for those wanting to buy, in my opinion, is being able to save enough for that initial upfront down payment. The cost of living in Toronto has dramatically skyrocketed in the past few years so saving up for a down payment actually becomes incredibly difficult. I’ve seen many young professionals with high incomes renting because they simply can’t save up for the down payment quick enough. It’s just unfortunate.

Furthermore, you simply cannot save quick enough for how quickly the cost of real estate appreciates. I put the 2 charts below together to help illustrate this very point. I took the average income in Toronto of $60,000 and the price of a $500,000 purchase (entry level home in the GTA) and mapped it against how fast you can save for the down payment. I built in a measly 3% appreciation rate in the price, but let’s be real, properties in the $500,000 price range actually appreciates much faster than that.

Chart 1 below illustrates saving 10% of your money per year (yellow line). For fun, I mapped this out for 45 years because that’s how long you’re “supposed to” work for.

You can see from the chart that Year 5 is where you will save enough money for a purchase at 5% down (i.e., where the yellow line meets the purple line). However, at 20% down (red line), it’s clear that you will never save fast enough for a purchase – the yellow savings line never intersects with the red 20% down line. Yikes!

Now let’s look at saving at a rate of 20% per year.

You can see that the numbers are a bit better. At 5% down, you’ll arrive at your goal quickly in 2 years time while at 20% down payment, you’ll get there in 9 years. That’s not bad and sounds reasonable.

As a caveat, both of these illustrative charts are based on pre-tax money for simplicity. Given that we live in Canada, you’ll likely forfeit at least 18% of your gross income to our tax system before it even hits your bank account.

Getting Past the Stigma – So if people already know about being able to buy with 5% down, then why don’t more people do it? This is mainly because of the attached stigma relating to the carrying cost of a 5% down payment mortgage. You must get mortgage insurance with a down payment of only 5% down, and as a result, your monthly mortgage cost increases.

The following chart shows the difference in total monthly mortgage payment between 5% down and 20% down on a $500,000 property.

The difference, as shown above, is about $445 per month. If you’re making $60,000 per year in Ontario, your monthly after-tax income is approximately $4K, which means that you can carry the $2,338 per month mortgage (5% down scenario). So regardless of the mortgage insurance or not, the monthly mortgage amount shouldn’t be an issue if you’re in this income range.

The Wrap – The biggest difference between these two scenarios above is that you are IN the market quicker with a 5% down payment, and the cost of owning real estate won’t sneak up on you as you try to keep saving up for that 20% down payment.

This strategy makes complete sense to us, and we hope it makes more sense for you now. Hopefully this has also helped to demystify and pull the stigma out of the mortgage insurance component. If you want to get a more specific breakdown of costs, then make sure you reach out to me, Zhen, at 416-436-9436.

Until next time happy real estate-ing,

How to BEAT the Banks

Published on 11th July 2019

Money is an interesting topic to bring up; it’s like politics – sometimes it’s better to not bring it up. However, I wanted to use this week’s Insight Article to briefly talk about how money is practically free at this point if you’re buying a property, and quite frankly, how to use the banks to your advantage (instead of the other way around!).

Ridin’ Low – We’ve been in a low interest rate economy for over 10 years now. My definition of “low interest rate” is a rate that is less than 5%, but I know it’s all relative. 20 years ago, it was closer to 20%. Less than 9 months ago when I wrote about interest rates, there was a lot of noise around rapidly increasing interest rates which caused everyone to freak out.

READ: New Mayor and Interest Rate Increase – What Does This All Mean

Below is chart of the history of the Bank of Canada’s overnight rate since 2007: Fairly LOW. Despite what the graph looks like, you’ll notice the highest point is 4.5% – that sounds like a low interest rate economy to me.

Accepting Change – As it stands now, the Bank of Canada is done raising rates until 2020 and there is a 40% chance of a rate cut. It’s kind of crazy how things changed so quickly, in the matter of only 9 months.

Regardless of how you may react emotionally to these announcements, things will carry on and there is really nothing you can do. As an example, when I closed my last property in December 2018, the rates were projected to go up another 1% in 2019. As hard as it was at the time, I took my own advice and went with a variable interest rate. Look at where we are now!

Free Money, How Do I Get IN on It? So how is money basically “free”? Of course, this is my perspective, my opinion. In our economy, if the money you have isn’t earning a return over what the projected inflation rate is, then your money will be worth less and less over time.

For example, if you left $100 dollars under your mattress 10 years ago, you likely can buy less with that $100 now than you would have 10 years ago. Simply put, that’s the factor of inflation.

The projected inflation rate in Canada is about 2%. This means that if you are not making 2% return on your money, then you’re essentially losing money. So that means if you have money in a GIC (Guaranteed Investment Certificate) account making 1%, then you’re actually losing money. Products like GIC’s are often marketed by the banks to you as a way for you to make a “return” on your money. But what they have intentionally NOT disclosed to you is that you won’t win with GIC’s in the long run if you factor in the concepts of time value money and inflation.

With mortgage interest rates as low as they are now at 2.5%, you’re really only paying the spread (i.e., the difference) between the rate of inflation at 2% and the posted rate of 0.5%. Just take a look at all of the promotions that are being marketed by the banks right now (see below).

So this means that for every $100 dollars you borrow, it’s only costing you $0.50. Do you think you can make more than 0.5% return in real estate each year?

The answer is 100% yes. If you are looking to see how you can profit from this (basically) free money, reach out to us here at PPTO to chat about how to potentially put this free money in YOUR pockets!

So why is this happening? Well, there are a myriad of reasons as the economy and the interest rate usually isn’t only driven by 1 reason, but rather, it is a combination of the following:

  1. The banks are starving for mortgage business. They can drop their rates to increase business – this is the fundamental Demand Curve in economics: lower price leads to higher quantity for product demand.
  2. The bond market, which is correlated to the fixed mortgage, is also decreasing thereby forcing rates down. We’re also in a weird situation right now where the fixed rate is lower than the variable. This is not normal, so you should 100% take advantage of this.
  3. Donald Trump is against interest rate hikes right now and Canada usually follows the US interest rate changes.
  4. The Canadian dollar is performing a bit too well right now and in order to maintain the cost for our exporting partners, mainly the US, we need to keep the interest rates low.

The Wrap – Is this current trend going to continue? I think so. However, like I said earlier, things can change quite rapidly. However, you could always take the route of having peace of mind by locking in your next investment property with a low fixed rate of 2.5% right now!

Even MORE Money Invested into Toronto

Published on 4th July 2019

Another major announcement was just made this week. Oxford properties will be building a mega-development right in the heart of downtown Toronto. This is going to be a 3.5 billion dollar project (that’s billion with B!), with over 4.3 million square feet of space being created. For some context of how large this project really is, The Well by Tridel was going to have 3.1 million square feet of space – that’s almost 40% MORE space for the new Oxford Properties mega-development!

Here is a rendering of the proposed project below:

This project is going to consist of half office space and half residential rental located just north of the Rogers Centre. Here is an aerial view of what the proposed site will look like from up top:

The existing buildings below with the yellow overlay will have to be demolished in order to make way for the project:

There are 4 critical things that I noticed with this announcement that I want to point out to you

1) Residential Rental Confidence
50% of this project is intended to be residential, but not your standard condo building with units for sale. The residential offering will consist of rentals. Yes, you read that correctly – there will be more purpose-built rentals coming to the market now that rent control has been lifted. Rent control was never going to be a good thing and with the removal of it, we are slowly starting to see institutional money get into the market.

2) Office Tower Intensification
I’ve talked about this in another Insight Article before.


We’re basically seeing a huge movement of global companies coming to Toronto to have easier access to the amazing talent pool that our local universities are producing year in and year out (plus many other perks such as lower costs of labour). Many office towers have been pre-leased even before construction, and I’m expecting no less for Oxford’s latest development.

3) Pension Plan Money
It has become increasingly more and more common for pension fund money (Oxford Properties is owned by OMER – Ontario Municipal Employees Retirement Systems) to be invested in the residential rental market. Pension funds have all migrated into the rental market in order to fund the expected monies that are owed when the largest population of workers, the baby boomers, retire in the next 10 years. It is reported that Oxford has seen 35% capital growth in the last 5 years resulting in $7.5 billion dollars (i.e., 7% per year increase) in their real estate portfolio. If institutions such as OMERS is confident in the Toronto real estate market, specifically downtown, you can understand why I am so bullish as well.

4) Tear Down & Rebuild Phase
We’re in the phase of Toronto’s growth where we are out of prime corner parking lots to turn into tall towers. We’re resorting to tear downs and rebuilds now. The existing building north of the Rogers Centre, as you can see in the last photo above, is roughly 5 stories high, at a prime intersection. Builders are now having to resort to finding land by rebuilding existing buildings. Ultimately, this means higher downstream cost because it’s no longer a vacant land on which to build. Higher cost means a higher price to you and I (i.e., builders will factor into their prices the cost of demolition and rebuilding). In any case, if builders are still tearing down and redeveloping, then you know they have a massive amount of confidence in the city as a whole.

The Wrap – I hope this project gives you some excitement as to why I am so bullish on the downtown condo market right now. The best time to plant a tree was 20 years ago and the next best time is now. This is the same for investing. If the fundamentals make sense, which they do according to Oxford Properties, then it is worth the investment.

Until Next Time, Happy Real Estate-ing,

Free Money to Buy a Home?? How?!

Published on 27th June 2019

Back in March, the Federal government and CHMC announced that they would be injecting money into the real estate market via “contributions” to first-time home buyers of up to 10%. It was unclear what the details were… that is, until last week.

The Details – Now we have some further details to share – the following is a summary of the program:

  • This program starts in September 2019
  • Eligible for 5% of a resale home
  • Eligible for 5% or 10% of a pre-construction home
  • Household income must be less than $120,000
  • The total amount of the mortgage plus the CMHC’s contribution must not be greater than $480,000
  • The maximum purchase price is $565,000
  • The loan is interest-free
  • The government will share all appreciation and depreciation of the home, proportionally to the amount contributed
  • Must pay off the loan after 25 years or when the property is sold
  • The government has set aside $100 Million for the program

The Verdict – In a nutshell, it seems like the Federal government is investing in real estate via first-time home buyers. I find that interesting. My initial opinion on this whole program still holds true after the learning about the details of the program as per my previous Insight Article post, which can be found HERE. This product sounds so niche that it seems like they are trying to fix something with nothing.

Reference Point for the Cap – Do allow me to explain further. When you think about the criteria for the program, one of the first few thoughts that come to mind is what can you really afford with a program that is capped off at $565K. To put this cap into perspective, here is what $565K can buy you:

  • 500 SQFT condo in Downtown Toronto
  • 550 SQFT condo in Midtown Toronto
  • 600 SQFT condo in Mimico
  • Freehold in Durham

So when Jean-Yves Duclos, the Liberal MP and cabinet member in charge of CMHC said, “Even here in Mississauga and Toronto, first-time home buyers will have many starter home options. The savings will be significant.” Other than condos, I don’t know what other type of starter home he is referring to that goes for $565K. Then he also mentioned this, “If you facilitate the purchase of new homes by young, middle-class Canadians, then apartments will be in lower demand and that means the price of rentals will also be kept more affordable.

Surge in Small Unit Demand – This is ultimately going to push even more new home buyers into the condo market because it has essentially incentivized first-time home buyers to buy pre-construction; they can get 10% instead of 5% contribution from the government. All of this is going to drive the demand for the smallest pre-construction units even higher. This same asset class is EXACTLY the type of units that investors are looking to pick up as well. Talk about a double demand whammy! Oh, here’s the kicker: the city limits the number of 1-bedroom units that a developer can build because they mandate that there must be a proportionate amount of larger units as well. All of this just points to smaller pre-construction units being in even higher demand than now, which will lead to further price increases in that market segment. Wonderful, isn’t it… only if you are an investor!

The Tax Man Strikes Again! Where do you think the government is getting money for this program? If you answered from taxes, then you are correct. This means that non first-time home buyers are essentially subsidizing for first-time home buyers. When it comes to government-run programs, nothing is technically free. It will ultimately cost someone something, somewhere.

Political Ploy? The fact that this program becomes effective only 1 month before the Federal election seems like one big “coincidence” to me. I can already envision commercials pandering to the Millennial generation for votes. “See, we implemented the first-time home buyer incentive for you, vote for us and we’ll remove the stress test”. The real estate market is going to get really wacky at that point!

The Wrap – At the end of the day, this program is so niche that I don’t think it’ll affect the real estate market that much, except for a small uptick in demand for the smaller condo units. This just looks like another political initiative that’ll essentially go nowhere. CMHC gets an A for effort, but will probably get an F for results. That said, only time will tell!

How Freehold Prices Can Dominate Again

Published on 20th June 2019

Ever since the Foreign Buyer tax was announced in 2017, the freehold market has plummeted in price with very minor exceptions. Combine that with the lack of credit available as a result of the stress test and Toronto has had the softest freehold market in the last 10 years. That said, we do see some indications of the overall market picking back up some steam – we saw the biggest jump in the number of transactions (percentage wise) in the reports that came out for the month of May. If you missed the Market Watch video about how the real estate market is bouncing back faster than expected, be sure to catch that video here: May Market Watch

The Moment is Yours – I’ve been preaching to everyone in the last 6 months that if you own a condo and if you ever wanted to move into a detached freehold property, now is the time to consider taking action on the upgrade. Will this window of opportunity be here for long? I don’t think so. As they say, carpe diem – seize the day!

Below is a graph from Realosophy that I’ve added some notations to in order to show you the current trends. This graph is a good summary of the price gap that exists between a condo and a detached property.

source: Realosophy

Honey, I Shrunk the Gap! As you can see in the graph above, the price gap between a condo and a detached in the last 2 years has shrunk from $700K to $450K. This is all thanks to the demand for housing that we have experienced. The market shifted not because there was no demand, but it shifted because people lost the interest and the ability to buy detached and freehold homes.

Shifting Gears – Ultimately, that pushed the price point down for many buyers in terms of what they could afford (i.e., a condo). However, with the latest numbers and how the transactions are broken down (that we saw from the May market results), people are going to start noticing the shift in freehold demand.

Take a look at the change in demand for each asset class in the last five months of 2019 vs the same months in 2018 in the graph below.

source: Realosophy

You can see that the change in condo demand is actually negative. This isn’t to say that condos aren’t selling (and trust me they are selling FAST!). Rather, this indicates that the more expensive asset class, despite the mortgage stress test, is seeing significant, double-digit growth.

I ultimately attribute the start of this shift to the shrunken price gap between a detached and a condo. With so many people being able to sell their condo at a much higher price (vs what they paid for it years ago) and buying a detached at a lower price, this is one of the best times to be buying a detached home in the last 5 years.

What the Future Holds – Our inventory has not really changed much as we don’t build enough freehold properties in the GTA anymore, so it is expected that we will run out of inventory at some point. When this happens, demand will far surpass supply and this is when we will be seeing another surge in prices for detached freehold homes.

You can already see there is demand for freehold semis and towns as per the graph below showing the Months of Inventory for May 2019.

source: Richard Robbins

Sooner Than You Think! The lower the months of inventory, the stronger the demand (i.e., the shorter bar graphs represent asset classes with the highest demand). From the graph above, you can see that the semis are the strongest right now. Detaches were at 4.5 months of inventory 2 months ago, and here we were in May averaging 2.45 months of inventory! This is why I believe freeholds can dominate the transactions again sooner than we all thought. There is going to be a point when condos are going to keep increasing in price and the gap with detached homes could potentially get even smaller. When that point is reached, I’m expecting that we will start seeing substantial price increases in the freehold market.

The Wrap – So if you have ever aspired to own a detached home in Toronto, the opportunity is NOW, especially if you already own a condo. The ability to upgrade while the gap is the smallest is absolutely something you should jump on. If this is an opportunity you’d like to seize, then make sure you give us a call (416) 436 9436, to take advantage of this opportunity!

Bonus: Final Thoughts – I’ll leave you with a final note to think about as an added bonus. This year, I fully expect the Liberal government to pander to the Millennials, who represent the largest voting and real estate buying cohort that we have ever seen.  They will do this by removing the stress test. Imagine what is going to happen to the market if and when that happens!! Houston, be prepared for TAKE-OFF!!!

Until Next Time,
(416) 436 9436

The Obvious Truth is More Obvious Now

Published on 13th June 2019

If you have been following my Insight Article posts, you will recall that I have talked a lot about the media’s attention-grabbing headlines. Despite their real motives of selling ads to advertisers in exchange for eyeballs (or in other words, readership), the media always has some kind of ability to sway the general public. This was true with the US elections and remains true for many other nations with political activity as well. It wouldn’t shock me if the media will play a big role in how we perceive our candidates in the upcoming Federal election.

So Why Is This Important? Well, we have 2 positive news from 2 different media outlets. The first and most obvious one is the numbers that came out for May 2019. In the month of May, we saw the largest growth in transactions over the past 2 years (up 19%). Keep in mind though, that up 19% translates to only 9,989 transactions which is still below the 10 year average. However, that doesn’t stop the media from writing about how the market is back and in full swing. For a deeper dive into this month’s stats, make sure you tune into the Market Watch for June (for May stats) by clicking on this link: CLICK HERE

News Correlations – Having a 19% increase in transactions is just the start. The second piece of news comes to us from HuffPost. The increase in buyer’s confidence could be attributable to HuffPost’s latest article, “Toronto Is The Fastest-Growing City In U.S., And That’s Not Good”. This article features 2 nice charts that seem to be shared everywhere now. I have provided them below for your reference:


Truth in Numbers – It doesn’t matter which photo you look at, and no matter how you slice it, it’s pretty obvious that Toronto is outpacing other major North American cities in terms of population growth. I’ve been preaching for a long long time now that we have a serious supply issue with all of the immigration coming into the city. Here are some further stats, based on the 2 graphs above.

The Great Migration – The red bar graph is the massive immigration that has made its way into Toronto from July 2017 to July 2018. To put things into perspective, we only had about 18,000 unit completions last year in all of the GTA. Clearly, there is a supply issue if you ask me. Then if you look at the purple bar graph to the right, there’s been an absurd number of people who have flocked to the Greater Toronto Area – 125K immigrants in a year’s time! Again, I’ll repeat the number of unit completions last year: 18,000!

So if that’s the case, and in order to fit 125K people into 18,000 units, that would mean 7 people in each unit… imagine that! That’s clearly not going to be the case but that paints the supply issue picture for you quite clearly.

With HuffPost writing about what we, as investors, already know as the obvious (the population increase), do you believe that buyer confidence is coming back? There hasn’t been any indication of the population increase slowing down anytime soon. Oh, and here’s the kicker – with so much red tape for development, and despite the number of cranes you see in the sky, we have 15% less construction commencements this year than last.

The Wrap – This is why I’ve been so bullish on the downtown Toronto market as of late. I hate saying this, but if you really do hope to get into the market before prices go up even more, then you should definitely invest in real estate now before it becomes even more out of reach. Seize the opportunities as they come. Give the PPTO team a call today to discuss your options!

Do You Really Need a Realtor?

Published on 6th June 2019

I’ve been a licensed Realtor for almost 8 years now, and the longer that I stay as a licensed Realtor, the things that I come across from other Realtors seem to get increasingly more ridiculous. Maybe that’s just the nature of being around enough Realtors and being exposed to the absurd things that some of them pull off. However, with each situation deemed to be ridiculous, the next case after that is usually even more ridiculous!

Realtor Overflow – Perhaps the training is getting further diluted despite the efforts by the Ontario Real Estate Association (OREA) requiring more course completions and charging more money to get licensed. Perhaps everyone getting their license is just unqualified. Or perhaps it’s the fact that passing the exam is literally a joke now because a simple search on Kijiji will show multiple people selling the test, guides, and guarantees of you passing the test for as low as $20. How about that, eh? What a deal! Fun fact – Ontario has the most Realtors-to-population, globally!

I’ve also seen a sign by the OREA office on Don Mills that clearly says, “Become a Realtor, No English required.” I don’t know who their target market is because people who can’t read English, in theory, shouldn’t be able to read that sign either… hmm. Anyways, my point is that being a Realtor really isn’t all that hard right now. If anything, it’s probably gotten easier with the old exams in circulation.

Do You Really Need a Realtor? So this begs the question – If we have so many unqualified Realtors out there, then should you actually hire a Realtor to buy and sell your house?

To be clear, although I am a Realtor, I actually dislike (most) Realtors. In the hierarchy of most despised professions, I’m pretty sure Realtors are only ranked lower than lawyers and used car salesmen.

Bring on the Good! With so many negative connotations associated with Realtors, should you actually hire one? The short answer is maybe, BUT if you do, make sure you hire a GOOD one.

PT vs FT – So let me break down how to spot a good Realtor for you. Some Realtors are part-time and I’m a believer that if you hire someone in the service industry, you should hire them if they are working at it on a full-time basis. You wouldn’t want a contractor to build your house if they only build houses for 10 hours per week. The same applies to Realtors. So right off the bat, you should rule Realtors in this bucket out.

Completed Deals – 62.1% of agents in 2018 did less than 3 transactions. Do you want to hire an agent that hasn’t sold more than 3 houses per year? The answer is probably no. So then what is the point of having a Realtor if 62.1% of them should not be hired?

Kickbacks – Further, there’s also an element of commission kickback incentives from agents who don’t know what they doing, and who are only Realtors because they need to put money on the table to feed their families. These activities result in some pretty ridiculous things.

Common Sense Checkpoint – Allow me to illustrate with an example. Last week, the condo that we listed ultimately ended up with 8 offers. This condo was clearly under priced at $699K and we were expecting offers over that. Any Realtor, actually even non-Realtors, are able to check sold history in the building to see that the last sale of a similar unit was $740K. The condo ultimately ended up selling for $790K, but here are 3 example offers that came in that made me question the common sense of the Realtors who submitted these offers.

Example #1 – An agent submits their offer with conditions (all set up for no conditions on this listing) and asking price. This Realtor called me constantly during the review process to see if he won the bid for their client. This is not that bad, and it’s quite common given the number of bad Realtors out there. The next 2 are ridiculous.

Example #2 – An agent submits their offer 3 hours after the offer date had passed, and significantly under the asking price with multiple conditions. This Realtor called me the next morning telling me their client was awaiting the acceptance and that my Seller was getting a great deal. Really?! Since he came in late, we had already accepted the 790k offer. I politely told this Realtor that he had missed his chance, and good luck with his buyer.

Example #3 – This one is a gem and it’s the most ridiculous I’ve seen… thus far anyways. A buyer represented by 2 different agents came in with 2 offers, and here’s the kicker – they each submitted a different offer price. Oh and here’s the kicker on top of the kicker – this buyer wanted me to show them the property personally, informing me that I could “double end” the deal plus some other unethical things. There are so many things wrong with this request, both ethically and legally, so I told him that I wouldn’t represent both the buy and sell side, and for this buyer to get a Realtor to represent him. Apparently, this buyer took my response way too seriously since they clearly ended up getting 2 Realtors!. Side Note: The offers weren’t even close to what it ended up selling for. The buyer and the 2 Realtors should be automatically docked some common sense points.

The Wrap – So after having read this week’s Insight Article, it probably makes you question whether you should hire a Realtor or not. If you are transacting in real estate, it is a good idea nonetheless to hire a GOOD Realtor who knows what they are doing because they should be able to facilitate the transactions, have the contacts to close the transaction, have access to projects before the public does, market and position your home, navigate multiple offers, and much more. Our PPTO team can do that and so much more!

I would say that 25% of Realtors who I have encountered are generally okay, and of that 25%, 10% are actually GOOD. That means there are 75% BAD Realtors out there, so that’s a ¾ chance that you’d pick a bad one. As with anything else, make sure you do your homework! Lucky for you though, you got yourself on the right mailing list because there are no bad apples here at PPTO!

Until Next Time Happy Real Estate-ing,

Getting Top Dollar for Your Property

Published on 30th May 2019

Last week, we explored the strategies to navigate through multiple offers from the buy side. In this week’s Insight Article, we’ll take a look at how to navigate through multiple offers from the sell side so that you can get top dollar for your property.

Economics 101 – Real Estate, when you break it down, is a very simple game of economics: supply and demand. If you understand how to market the supply and demand, then you can use it to your advantage. We had a few listings this month and we navigated through each of them differently, with a different strategy for each. This is why it’s imperative that you hire a good Realtor to buy or sell because they should be able to pinpoint the best way to create demand for a property. Unfortunately though, 80% of the Realtors don’t do anything when they get a listing, other than putting it on MLS. The real estate profession is VERY saturated, but I digress – more insight on the profession next week!

I’ll use 2 of our recent listings as examples on how to position your property to create demand.

  • Prime downtown condo (multiple offers)
  • Old house in Newcastle (no multiple offers)

So we did our usual thing with pretty photos and got the listing ready. However, we did something different for this unit though – we forced all of the first weekend showings within a small window of time on the weekend, fully knowing that all interested buyers would run into one another while getting the keys. This created even MORE demand. We also marketed the unit for sale to the entire condo complex because we knew nosy neighbours would want to come and see the unit, thus adding to the in-demand feeling. That first weekend, we got over 50 showings! Of course, we held offers, and got the due diligence package ready for buyers in preparation for offer night. Offer night came and we got 6 registered offers, but actually 8 came through.

Photos of the unit are below.

The Offer Night – My client agreed to try a new offer night tactic with me. More often than not, Realtors allow buyers to improve their offer with multiple offer rounds, which often leads to long offer nights. What we did instead was that we used a strategy whereby the deal would be done in the most efficient way possible, and all buyers would only get one shot. At the forefront, this may seem counter-intuitive because most buyers in these multiple offer situations would always start low, with the intention of improving their offer in the subsequent offer rounds.

Heavy Hitters – However, what actually happened with our new strategy for this waterfront unit was that all of the real buyers came out to play and the ones who were not serious about winning the bid were immediately weeded out in the process. In a situation with 8 offers, 2 were pretty unspectacular (as expected). The remaining offers were all so strong that 3 of the offers even broke the price per square foot average for the building! At the end of it all, we got both the preferred closing date and the highest price that we wanted for our seller.

The moral of the story here is to create more demand if you can, even if there is already naturally high demand, especially if you know that the supply for your type of unit is on the low end.

Example #2 – Old House in Newcastle with No Multiple Offers – This property was on the far east side of Toronto (Newcastle), with a 1.5 hour drive from Toronto. As a result, the demand here is not huge. This property was also quite old with a furnace that needs an impending fix. The previous Realtor had been trying to sell it for about a year, with no success. So how do we create demand for this property?

Forced Demand, Does It Work? Luckily for us, this was an entry-level, single-family detached home around the mid-400’s. You must be thinking – a freehold, detached house in the mid-400’s?! I know right! The supply isn’t strong, but it isn’t weak either; I would say it’s balanced. With a property like this, most Realtors would recommend that you drop the price, put an offer date on the listing and hopefully because of that, it draws in traffic and sells quick. Try to create demand with multiple offers – that’s what the seller had generally heard from other Realtors before. That’s incorrect, at least for this type of product. You cannot create enough demand to force multiple offers on a property like this. On offer night, this often employed strategy will only make your property even less desirable because there will only be 1 offer, or 2 if you’re lucky. Our strategy was to re-adjust the price, increase the buyer’s commission and create a better product.

Going Against the Grain – Simple and nuanced things are what ultimately resulted in a sale within only 1 week. We re-adjusted the price by $5,000 to show good faith that we wanted to sell, hence creating demand. We increased the buy side Realtor’s commission, thereby creating Realtor commission demand because self-serving Realtors sometimes don’t even show their clients properties unless the commission is 2.5%. We also made some minor and inexpensive tweaks to the house to create a newer, more finished-looking product, such as re-painting the trims, new outlet covers, and giving the living room a feature wall.

The photos below are the before and after images, respectively, of the unit before and after making the minor tweaks. What a difference a few small changes make, eh?


The moral of the story here is that for certain assets in certain neighbourhoods, you simply cannot create enough demand for multiple offers. There is no one-size-fits-all strategy when it comes to buying and selling real estate. Every situation is different and it really does take the knowledge of an experienced Realtor to get the job done, and the job done well.

The Wrap – I hope that sheds some light on how to get top dollar for your property. Creating multiple offers is just one tactic, but it doesn’t always work. If you’re looking to sell your house in the future and you’re wondering what the best strategy is to get top dollar in this market, then make sure you reach out to us. Our team is here to help guide you through the process every step of the way!

Until next time, Happy Real Estate-ing
(416) 436 9436

How to Navigate Through Multiple Offers

Published on 24th May 2019

Yes, They’re Baaack! Multiple offers are back again and they’re likely to stay for a while because we’re in a seller’s market. Without sounding like a nagging parent, these multiple offers are here to stay until the supply issue is resolved or until the demand dies down. Following the trends though, the supply issue is here to stay and the immigration will keep flowing in.

Fight or Flight – Anybody who doesn’t follow the real estate market as closely as we do are often shell-shocked when they decide to finally get into the market. Some stay in a state of disbelief and think we’re lying to them, while others may understand what is going on and just proceeds to navigate through it. The information discussed in this Insight Article is largely focused on properties that are under one million dollars, which includes condos that are in the downtown core and semis and towns in the GTA.

Offers Here, There, Everywhere – As Spring is in full swing right now, I’m encountering more and more multiple offers on good properties. These are 3-bedroom semis and towns with 2 car parking spots, and 1-bedroom or 1 + den condos with parking spots. All of these unit types are in super high demand right now.

Offer nights usually present themselves with 3-4 offers. This is not nearly as crazy as back in 2016, but still competitive nonetheless. In next’s week Insight Article, I’ll provide you with a behind the scenes perspective, based on a highly sought-after property listing.

Top 3 Tips You Should Know! For this week, the following are my tips on how to navigate through a multiple offer situation:

  1. Get a Good Realtor
    This may sound self-serving, but I’m completely serious. If you hire a new agent because they promised you some kind of commission rebate or you’re shopping around for an agent because you don’t see the value in having one, that’s ultimately your decision to make. Having a good Realtor on your side will give you good knowledge on pricing and non-biased, third-party advice on the offer date. Yes, you can use House Sigma and Bungol to see sold prices in the area but that’s only half the battle. As a buyer, you may have only had experience transacting real estate only 1 to 3 times at most, and oftentimes, not even in multiple offer situations. I encounter these multiple offer cases on a weekly basis, multiple times.
  2. Be Mortgage Approved
    Whenever I speak to a client, I always ask if they have spoken to a mortgage broker first. The main reason for that is because if your mortgage is approved, then you know what your upper limit is. I try to not make you spend the maximum amount that you have been approved for, but rather, I normally focus on the best value product that you could afford. Sometimes, I would propose a different area or a different asset class. Second, knowing the maximum mortgage amount that you are approved for will also help you during the multiple offer situation as more often than not, there will be a time to improve your offer during offer night. Third, if the situation calls for it, you are able to waive your financing conditions in order to improve the terms of your offer. That will go a long way if the multiple offer situation gets heated.
  3. Have the Deposit Ready on Offer Night
    Having the deposit ready on offer night will show that you have the money. Most of the time, money talks. You have to remember, until there is some kind of consideration for the contract, up to this point we’ve really only been pushing paper. Although both parties are legally bound to the contract even before the deposit cheque is received, the anxiety that many sellers have between receiving the deposit and accepting the offer is unreal. It’s like the old adage, “Show Me the Money.” That’s why having the deposit ready on offer night will go a really long way. Most of the time, a photo of the deposit is sufficient. If you are presenting it in person, then bring the deposit cheque with you. There is no harm in doing this because creating a bank draft is sometimes free, depending on your bank and your account type.

The Wrap – So those are the major tips on how to navigate through a multiple offer situation. There are obviously more minor strategies that one could utilize, but these major ones should be sufficient. In next week’s Insight Article, I’ll be providing you with some similar insight with multiple offers, but from the perspective of a seller and how to maximize a good property to get multiple offers and top dollar for your highly sought-after product.

Until Next Time, Happy Real Estate-ing,

The Big Bad Bully Offer… May Disappear?!

Published on 15th May 2019

I’ve worked with many clients from different countries and over the years, I’ve learned that there are different ways in which real estate is sold. I can’t say which way is the better way because I’m limited to the parameters of how to trade within our region. However, what I can say is that our system is quite problematic when it comes to understanding how the market behaves, especially those who have not transacted in our market before.

Creative Selling – The very standard procedure (and what most people know) is to list the property at a reasonable market price, expect offers and then to hope that the property is sold at full listing price. However, the problem that we face (and has occurred) is such that when the inventory is low and the prices get heated, it results in a heavy seller’s market. All of this leads to really strange, and creative, ways in which a property can be sold, especially the second case below:

  1. Under-pricing the property and holding offers.
  2. Under-pricing the property, holding offers, and taking preemptive offers.

Proposal Pitched – Combined with the fairly useless training that you get as a Realtor before you get licensed (Realtors are a dime a dozen, need I say more?), the second case above creates a world of chaos. This is why the Ontario Real Estate Association (OREA) is proposing an elimination of preemptive offers. My thoughts are aligned with the elimination of preemptive offers.

In reality, preemptive offers are just a fancy, politically more correct, term for “bully offer”. It’s like the Raptors saying that Kawhi Leonard had “load management” instead of resting him “just because”, to avoid a fine from the league (for context, he didn’t play for a number of regular season games, which ultimately paid off because his healthy state helped us win game 7 in the second round of the playoffs!). Preemptive offers and bully offers are the same thing, but the former is just wrapped up in a nice ribbon. The elimination of this sugar-coated strategy is a good thing in my opinion.

The Big Bad Bully – A bully offer is one of the most frustrating things for buyers because if you’re represented by a Realtor who doesn’t fully understand the ridiculous process of navigating through a property listed in such a manner, you would generally end up being very disappointed with the whole experience.

How could you not, right? You see a beautiful property for what you think is a steal of a deal. You prepare to submit an offer that is slightly over what they are asking for, but then you find out, a few days before the listed offer date, that it was sold even before you had a chance. This is extremely frustrating as a buyer, especially when non-ethical listing Realtors are not notifying all of their potential buyers about the offers being submitted (usually, they do this because they are looking to double-end the deal, that is, earning both sides of the commission – the buy and the sell side). Yes, there are some fairly “corrupt” Realtors out there, unfortunately. That’s why I’m all for the elimination of bully offers by OREA.

Say What… Disgorgement? This proposal, however, seems a bit late because this was a huge issue in the overheated markets of 2017. In the current market though, I don’t really see these practices all that often anymore. That said, this proposal is still a good step towards creating an ethical buying process overall. The proposed punishment will be a fancy term called “disgorgement,” which basically means that whoever is executing a bully offer, both buy and sell side could lose their commissions earned.

The Wrap – This is a great step towards providing a more transparent buying process. Next up on OREA’s agenda should be better and more practical training to be licensed as a Realtor. Currently, new agents getting licensed know almost nothing about actually transacting, but that’s a topic for another day!

Until Next Time, Happy Real Estate-ing,