The Truth About Real Estate

This blog is inspired by a great article published by the Toronto Star late last year...

We've all heard them at various cocktail parties or the minute you tell someone you're thinking of buying..."Buy the worst house on the best block!"

Here's a look at which real estate truisms are worth paying attention to and which are as fluffy as your down pillow.

Truism #1: Location, Location, Location

First, let's define 'location'. It can mean more than just the neighbourhood.

Some of the obvious location features of a home are always going to help home owners retain and increase value in both good markets and bad...being in a sought-after neighbourhood, proximity to downtown, access to highways, great schools, lakes etc.

If you can afford to get into the typically desirable areas such as Rosedale and Lawrence Park you are, of course, going to see steady increases in value. For those who are thinking towards the future, there are many indicators of a great 'future' location.

Let's take Leslieville and Riverdale for example. We've seen huge increases in values in those areas, even though years ago they were less than desireable and still have a long way to go. But look at the fundamental characteristics of those areas.

They are both close to the waterfront and main highways like the DVP and Gardiner. They offer great TTC access and are less than 15 minutes from downtown.

Look for areas where the 'early adopters' are hanging out, where the hot new restaurants seem to be opening, and if you can, get in before the first Starbucks opens! Case in point - Logan and Queen. Not a great area even a year ago and guess who just opened on the corner.

Also look at the edge of great neighbourhoods. The stretch from Woodbine to Coxwell was not considered to be part of 'The Beach' but now commands property values that are just as high, and you don't have to deal with the tourist traffic.

Other things to note when considering location...

You may be in a great area or up and coming area, but watch out for low-income housing (sorry folks, this is true), homes where the neighbour is a nasty parking lot or where you have great view of the back of those new restaurants who will be dumping garbage in their bins, the noisy TTC streetcar turn-arounds, train tracks etc.

Think about your buying area first, then consider the immediate radius around your future property.


Truism #2: Always Buy the Worst House on the Best Street

Fabulous idea if you have the funds to renovate. If done well and within budget, home owners can stand to make a great deal of equity or profit. It may also be the only way you can afford to get into the neighbourhood.

But watch out for fundamental property and building flaws that could make it a money pit. Or features than can not be rectified with a reasonable amount of money.

When it comes time to sell, you will only get as much as your home is worth, not how much the best house on the street is worth. If you have a 2 bedroom home and the biggest, best house is a 3 bedroom in similar condition, it will always get more money.

You also need to consider you own personal goals. Do you want to live in the worst house on the street? Or do you actually want to be in the best house? Are you buying for re-sale value in years to come or are you buying the right house for your family?

It all depends on what you are looking for.

Truism #3: Price To Sell

Of course you want to price to sell—but what’s the right price?

Some sellers deliberately price low or 'hold back' to encourage multiple bids with the hopes of getting a final offer over the asking price and possibly over market value. But your home has to be highly appealing and in a sought-after neighbourhood.

This means investing in professional staging and effective marketing. It also means being able to tolerate risk. Other sellers prefer to price in accordance with the highest sale on the block. They assume or think their home is comparable. Or they say, "Let's just put it on at $X price and see what happens" hoping they will luck-out.

But both routes are risky. Going too low in the hopes of sparking a bidding war can just as easily backfire, leaving the seller with offers that don’t exceed the too-low price, while pricing too high can mean you’ll just have to cut the price later.

The experts suggest…consulting the experts.

Have the house appraised by a realtor. They should provide you with a detailed Comparative Market Analysis that shows what other comparable homes in your area have sold for that. Then make a cold-eyed comparison: how does your house really stack up?

It also depends on your circumstances and those of the market. Have you already purchased another home and need to sell by a certain date? Or are you flexible and able to tolerate some risk? Is there very little supply in your neighbourhood or 'for sale' signs everywhere?

At the end of the day, your home is worth what the market is willing to pay. If you are not comfortable with 'holding back' for multiple offers then price as close to the current market comparables to get the best price for your home.

Know anyone who is looking to buy? Please forward this blog on!

info@markrichards.ca
(416) 728-2499

Regards,
Mark