Last Time Sellers: The Planned and the Unplanned

First time buyers get the lion's share of media attention. Not terribly surprising as our culture does tend to obsess over the young and what they'll do next, and a great number of first time buyers are young or at least 10-15 years away from retiring. The term first time buyers comes off as a bit exciting. They're getting on the train. They have a full life ahead of them. They're growing and saving for the future. What will they do next?

Today's blog, however, is all about the last time seller, a person who's  deciding to get off this property train. Perhaps this may not be where you are just yet. In fact, it may not even be crossing your mind, but it will. If not for you, then maybe a parent or a grandparent whose property you will have some stake in.

Often last time sellers have owned a property for a long time instead of changing it up every five to ten years. They are likely retired or retiring or can no longer take care of their current property. I find many Torontonians over 70 have owned their house for their entire lives. They have not moved around as much as the under 70 crowd. When last time sellers bought a home, they grew roots there. It was not just an investment. In general, this generation is a trustworthy and loyal bunch as long as they feel respected.

Like first time buyers, there is a certain way to handle this last transaction to benefit you or your parents the most. In my real estate experience, and my own personal experience, last time sellers fall into two categories. The planned and the unplanned.

The unplanned do not look at the future as something to be organized, but it is something that will happen to them. However, this can be a stressful approach when a crisis hits and there is no game plan. Some last time buyers can no longer take care of their home and their health requires that they move. Even then, I often hear: "The only way I'm leaving this house is if I'm carried out in a box."  If something happens where an owner can no longer manage their lives on the property, then families are left scrambling to find appropriate housing and trying to figure out what to do with the family house.

Then there are those who decide to be last time sellers, the planned last time sellers. Some decide to get out of the market and enjoy the money they have built up in the equity of their home. They often rent instead of owning, freeing up their money for cruises, their kids, their debts, their enhanced lifestyle, their rental unit,  Shady Pines or whatever they like. It's their money.  The difference is that the fist unplanned group waits for a crisis to occur before making the move. The second prepares for the sale accordingly. It would not be hard to figure out that the planned group does much better than the unplanned group financially when it comes to the sale of their homes.

In some ways, last time sellers are like first time buyers.  Ideally, you want to enter the market at a low point and sell at a high point. Of course, life doesn't happen that way. You can't wait around for twenty years for a correction to occur. As always, it's very tricky to predict the top.

The big difference between first time buyers and last time buyers - first time buyers can wait it out. So, let's say a first time buyer bought his or her first property in 1989 at $500,000 in Toronto's Cabbagetown neighbourhood.  Because that was the height of the market, the first time buyer would have lost money if he or she tried to sell it in say 1995 where values where much lower. By around 2001, the prices have come back to 1989 levels. By 2015, they would have surpassed those 1989 selling prices significantly. So, if the first time buyer, even in the unluckiest 1989 market, does have time on their side. This past example is the most extreme one of the past fifty years, but it does make the point that waiting will bring the prices back. Even if the market corrects, most first time buyers, if they hold their property long enough, will experience a strong real estate market again, hopefully sooner rather than later.

Now last time buyers don't often have time on their side as much. If you are near the retirement age or are planning on using the value of your home to fund your retirement, you have a tough decision to make. You may not want to wait around for twenty years if their is a market correction. You will want top dollar for your property now or at least soon. You don't want to sell too soon. You may miss out on a lot of appreciation, but you don't want to wait too long so that you will have to accept your property value at less if there is a change in the market.

I'm not going to offer timing advice here. The timing has to be right for you . Make sure it's the right time for you or your parent on a personal level first. If you are tired of shovelling and cutting grass or all your friends or your Mom's friend have moved into the retirement community down the street, then it may be time.

For last time sellers, I would make the following suggestions though:

1. Staging Matters. When it comes time to sell you home or condo, or your parent's property, know your buying demographic. You may have to appeal to them for top price.

2. Have a Clear Will - Make sure you have every thing in writing in a will. Know who will look after your affairs if you our your parent cannot.

3. Kids - If you are helping your parents move to the next step or if you have kids of your own, lean on them. They owe you! You have supported them your entire life. They can help you organize and prepare your home along with your agent.

4. Know where you are going. Make sure the next place is the right fit for you or your parent, whether you are renting an apartment down the street, moving to an assisted living organization or sailing off in a yacht around the world. Make sure you put the time into research and testing.

5. The Long Good-Bye - For some people it can too tough to leave a place they have been a long time. Some people have built a lot of memories in their home whether it's a parent you're helping or it's you. I say let yourself be sad. Mourn the loss of your condo or house, but allow yourself to be a little excited about the next chapter. I find with a fresh start and an easier and pared back lifestyle, many last time sellers have the freedom to do more and be more social.  With that said, you have to be ruthless with all of the stuff that has accumulated over decades. Chances are, you won't be using 90% of it again. Know what's important and know that you will never use that fondue set again from 1983, even though it still works.

The Right Way To Sell Your Home in A Bidding War

Once you own a property, you are never the same again. You are invested. Not just in the obvious financial way, but in a way that you couldn't quite wrap your head around before you owned property. You are more curious about your neighbourhood. You become excited when a new restaurant or coffeeshop or baby gear store opens up within walkable distance. You keenly pay attention to real estate articles, blogs and gossip. Instead of feeling terror and disappointment at the rise of property values, you most feel a little giddy, even proud of price appreciations in your neighbourhood or condo building. 

Of course, there will come a time when the home owner or investor will choose to let go of their beloved property. Sometimes you need more space. Sometimes you need less space and less maintenance. Sometimes you meet someone with whom you would like to share property. And sometimes you discover you may be better off on your own, or maybe with someone else. Whatever the reason is, when it comes time to sell, sellers want to receive the best price possible. 

Though there are many different strategies to arrive at the best price, many sellers these days would like to see their property sell in a bidding war. And really, who could blame them? What's not to like about buyers competing to buy your home? The thing to remember, however, is that not all homes sell in multiples. Still, this selling strategy has a lot of appeal to sellers right now. 

During chats with neighbours over fences, in elevators or while leafing through the paper on their own, most sellers gravitate to those stories around bidding wars. Why? Well, because it's a rush to know that a house could sell for way over the asking price. When there are multiple offers on a home, it does lead to the best stories - drama, suspense and possibly a little shock or disappointment. So, if you want to sell your place, the question becomes: Is setting your property up to sell in a bidding war the best way to sell your home? Do you need the drama? Does it always work? 

If you do feel like this may be the best route for you as as seller, then you need to do your homework on your neighbourhood or building. Receiving bidding wars on a property is no guarantee. If you are keen on setting up your home for a bidding war, you may want to consider these things: 

1. Get an agent who knows how to market your home. Don't go for someone who is just going to put your property on the MLS .You need someone who will really market it. 

2. Know thy competition - Know the other houses in your area. Which one are receiving multiple offers? If it is the staged ones, you will need to do some work to prep your place. If your home is nothing like the properties receiving multiple offers, then you may want to reconsider. 

3. Look at the culture of your neighbourhood. Some condo buildings don't have bidding wars at all. So, it may be weird if you try to buck the trend. Some neighbourhood have bidding wars constantly. Some have very few. Know your building or neighbourhood well. 

Still feeling you want to try the bidding war option? There are two different approaches to selling in a bidding war. One is that you list your home lower than market value in order to drum up as many offers as possible. With this method, you could potentially receive several offers that would send the price of your home above market value. On the flip side, you could receive no offers, and then your property looks like it can't even sell at the low price. It can be risky. 

The other, less risky, way is to list at market value and hold back a week. This way the property will have a full week of exposure for marketing. If you receive list price, then you're happy. If you receive more, even better. 

Whether you are planning for multiples or not, you need to prepare. What happened six months ago is not relevant. Bidding wars do come in and out of favour. Buyer do go through periods of bidding war fatigue. Remember, it may be exciting and story-worthy to sell in a bidding war, but at the end of the day, you need to pick a strategy that will sell your home for the best price reflective of the current housing market, whether that's in a bidding war or not.

Buying or Selling a Condo? Make Timing Work For You

Timing the real estate market. So many believe you could make buckets of money if you could master it. To be honest, I think this is a tough thing to rely upon to make your fortune in real estate. I see buyers standing on the sidelines for years as Toronto prices continue to go up, and they miss out on buying a house for half the price it was 10 years ago. I'm not talking about that kind of timing. This kind of timing can be unpredictable. Should you buy in 2018? Will the market crash? This is not the kind of timing on my mind.

In this blog, I'm talking about something more specific, particularly when it comes to condos. It is something that could be applied in any market to improve your chances of getting a better deal. No guarantees, but better chances. Some condos will sell well at any time because they are in great location and have grown a waiting list of people who are trying to get in. Then there are those condos that have a certain amount of stigma, rumours (or truths) of bad construction, poor quality, or poor management. Let's assume, we are dealing with condos that are well run and well located.

For buyers, when it comes to timing, you may want to consider the following:

1. WHEN BUYING NEW

When developers first go on sale with a new condo, they offer their standard prices. If they do a good job advertising, everyone will run out and buy a condo unit until there are none left. This doesn't happen quite so often nowadays. Since there are more new condos for sale at the moment, not all developers are hitting their 70% sold units they require before they start construction. Without that 70%, they cannot build their condo in Toronto. For example, if units that have sold are stuck at 60%, developers will be willing to bargain since they want to go that extra 10% to get their project off the ground. Rarely do they lower the price. Instead, they start offering incentives to push themselves over than 70% hump. They'll offer things like: a free parking spot, a free locker, upgrades to the kitchen or free maintenance for a year. So, as far as timing goes, this would be a good time to make your move to buy new.

2.RIGHT AFTER A NEW CONDO IS REGISTERED

Once a condo is registered, buyers start paying a mortgage to live in their units, and a condo board is formed. Construction is done. It is the birth of a condo. At this point, buyers can become sellers. That is, they are free to sell their properties for the first time. More often than not, a bottleneck of sellers forms. Since the two or three or five years that those original buyers bought a preconstruction condo off of the floor plans, many of their lives have changed. They fell in love, had a baby, had a divorce, or found a job far away. In turn, their lives are no longer harmonious with the condo they bought many years ago. So, they try to sell them. In addition, there are the condo investors. These folks bought a unit in a condo building with the purpose of renting it or selling it once it was completed. Most will hold on to the unit and rent, but some will try to sell. With those two groups combined, there are often many sellers ready to sell all at once when a condo registers. This, in turn, may lead to a temporary lull in prices since new buyers have so many units to pick from. They can negotiate a lower price. Again, no guarantee this will happen with all condos, but it happens.

3. OLDER CONDOS

This timing method is not for everyone, but if you like space, you may want to purchase a condo that has been around a long time. Not just any old condo. Make sure it has a healthy reserve fund and is not falling apart. If you are open to an old one, chances are your maintenance fees are a little higher, but back in the 80s, wow, they knew how to make condos big! Many other buyers will poo poo an old condo since they look dated and don't show well. So your competition will be minimal. If you're up for a little renovation, you can probably get a larger condo for less.

For Sellers, you need to look at things a little differently. This is how I think sellers can benefit from timing:

1. THE FIVE YEAR MARK

If you have lived in condo that is roughly five years old, you are at peak selling potential. Why? Well, your condo is old enough to have built up a strong reserve fund for future repairs and updates to the condo. Also, after five years, the common elements are usually still in pretty good shape. The fixtures on the lights are still modern. The machines at the gym are all operational. Plus, the design and the style of your unit does not look old fashioned. Essentially your condo will not be upstaged by newer more modern condos. Finally, nothing has broken down yet. No big costs to fix the roof, the elevator, the windows. All these things put a buyer's anxieties at ease and provide the visuals that appeals to many buyers. It's a good time to sell.

2. NOW

This winter has provided a very low supply of houses and condos. Though houses are in higher demand, condos are much more available. Still, there are less condos for sale now than this time last year, and they are selling faster and at slightly better prices than the Fall. I'm not sure this will last until the Spring, but if you can pull it off, get out there now if you want to sell a condo this year.

3. AFTER A CONDO RENO

So maybe your condo is older, and maybe less desirable in the eyes of some buyers, but if your condo building has recently done a renovation of the common elements - a new carpet in the hall, a more modern lobby, and a fresh paint job, your chances of having more success with a sale will improve. Even if the condo is about to have a renovation, then that can be an incentive for buyers to get in there. Hopefully this renovation has been done after those running the condo have saved the money to update the amenities as opposed to depleting the reserve fund.

Now, I'd like to say it again: Timing isn't everything. This is true especially for sellers where having a great marketing plan is key. You need to know how you and your salesperson are going to advertise your property beyond a posting on MLS, how you will stage it, how you will stand out from other units in your building, and how you will negotiate your sales price. You need a strong marketing plan to attract those buyers.