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Home sells for $605,000 over asking
A house on the market for $1.295-million has sold for $605,000 over asking, sparking debate on the role of the bidding war in Toronto. Sitting on a 50-foot wide lot on Munro Park Avenue, a leafy street that peeks out on the lake and is arguably the most desirable in the Beach, the four-bedroom home sold for 47% over asking, almost unheard of in even this city's booming real estate market.
"It was an American Idol feel out there. There were 10 agents on the stairs," says Royal LePage's Mark Butkovich, who along with Al Sinclair represented the buyers, a young childless couple who wish to remain anonymous. "I knew it was going to be highly desirable. I just didn't quite anticipate the end result."
"I figured we might get $1.5 on it, but certainly I didn't see $1.9 coming," said Re/Max's Teresa Elliott, who represented the seller, a middle-aged woman whose family lived in the home for 45 years. Built around the 1930s, the 2,000-square-foot house is in good condition but in need of renovations.
It started showing on July 6, getting about seven visits a day. Five home inspections were soon booked. "It was at that point I knew that it was going to go way over," Ms. Elliott said.
She and her client held off offers for six days, which is common in the city's hot areas. The bidding war ensued on July 12 with 10 offers. The most heated "one-upmanship" was between two parties who bid the same amount, including the young couple who eventually offered nearly $2-million for the home.
In a failed attempt to sway the seller, one agent reportedly even brought in family photos.
"It was very nerve-racking the way it went down," Ms. Elliott said. "There was a lot of pacing because the two offers were competing against one another."
The Munro Park sale illustrates the pressure-cooker tactics being employed in Toronto's hot real estate market. "We've got an insatiable demand for really upper-end homes in the Beach right now. There's very limited supply coming on to the market," said Re/Max's Grant Hilborn, who has sold houses in the area for two decades. "I think it's endemic of a real surge in the market, especially in the last four months. It's been surprising how busy it's been down here. It's busier now than it's ever been."
Everyone agrees supply is not meeting demand in downtown Toronto, a condition that has long sparked bidding wars. Mr. Hilborn had another theory on why would-be homeowners are bidding as much as 30% or 40% over asking: growing gridlock. "I think there's a lot of buyers now that perhaps 15 years ago would have moved out to 905 but just because of the traffic now, I think they're staying closer to the city core for ease of transportation."
But there are other factors at play. The children of Boomers have been taught by urban parents to invest in property early, so they're vehemently anti-rent, Wilfred Veinot said. The Sutton Group salesman sells in Riverdale and neighbouring areas in the east end and actually looked at the Munro Park Avenue property for himself. Mr. Veinot said nine out of 11 of his most recent buyers were expectant parents between the ages of 30 and 35 to whom good school districts and proximity to transit were a must.
Many of them, he said, are getting fed up with competing in bidding wars.
"A lot of buyers out there are very pissed off ... In this market, if your budget is $600,000, you need to be looking at the $500,000 asking houses because with six, there's always someone who can go seven."
Re/Max West Realty's Ted Colomvakos agrees. He has seen fewer bidding wars in his area, Little Italy and the Annex, west of Bathurst, where young clients abound. "People are getting sick of competing. They're sick and tired, especially if somebody's lost three or four houses to competition. They're kind of discouraged, and they get annoyed."
Consequently, some real estate agents cannot satisfy would-be buyers reluctant to rent but unequipped financially to buy downtown. Mr. Veinot has had numerous clients come to him this month resisting the renter's life while refusing to settle for a condo because they have small children. "They have no options but to rent and unless the market dramatically changes, they can't get anything. I think you're going to see more and more of that."
July 26, 2007 in Toronto Real Estate Update | Permalink
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