http://wwThe seller: In the hot seat
August 27, 2010
Tony Wong
BUSINESS REPORTER
When Liliana Montagliani and Pasquale Luciano listed their Mississauga home in the winter, they had high hopes for a quick sale.
“The market was very strong and we were in a great neighborhood, so we thought it would sell in a couple weeks,” said Montagliani. “We didn’t think we would be in the position we’re in today.”
In March, the four-bedroom Port Credit home listed for $900,000, but there were no takers. By May, the price had been slashed to $839,000. This month the couple cut the price to $799,999, or about $100,000 less than what they had hoped for.
“It seemed like a month ago, someone suddenly turned the lights off,” said their agent, Steven Belitsky. “Who would have thought the market would have stalled this quickly?”
Analysts have long been saying that the second half of the year would look vastly different than the first half, which saw record sales.
Sales have been falling every month for the last three months. In the first two weeks of August, sales fell by 29 per cent compared with a year earlier.
As a result, many vendors such as Montagliani and Luciano are caught in the downdraft, and have had to revise their expectations of what they can sell their homes for.
“It’s been frustrating and a little disappointing to say the least,” says Montagliani. “As a vendor you don’t want to give your home away.”
Other home owners have simply decided not to put their homes on the market. Listings were down 8 per cent during the first two weeks of the month compared with last year.
“This is what we call a real metamorphosis market,” said ReMax agent Mike Donia.
“In the old days you list it and your caterpillar takes wings and turns into a butterfly. But there a lot more caterpillars out there today, and if you don’t eventually adjust your prices you’re going to get squashed.”
Donia says some vendors are pricing their homes with the mindset that the market was still going up with double digit appreciation as it did earlier in the year.
In the second half of the year prices are expected to decelerate. And even the normally impervious upper end market has taken a beating. Agents are still talking about the Forest Hill home that sold for $3.5 million this month. In 2007, the same home had sold for $3.68 million.“Sellers are finding that they have to have a lot more flexibility and they have to be much more realistic today,” says veteran agent Sharon Black. “Don’t expect every home to sell in five days.”
Black is currently listing a Yorkville loft with an asking price of $499,000.
Two years ago the vendor purchased the 900-square-foot property for $489,000. After commissions and land transfer taxes, the vendor will end up taking a loss, said Black.
“The market has turned. In this case the seller is getting 2008 prices for their property,” said Black. Vendors who waited too long to list their property because it would show better in the summer – “Wait till you see my tulips bloom in July” – would have been disappointed said the agent. “In this market, he who hesitates is lost.”
Belitsky said the one piece of advice he would offer vendors is “not to chase the market down.”
The sale could die a slow death if vendors incrementally drop the listing price as the market cools. Best to make one dramatic cut and get it over, said Belitsky.
“If you follow the market to the new lower price you’ll never sell – you have to get ahead of the market,” said Belitsky.
As for buyers, Belitsky says the market mantra can be summed up pretty much in one sentence: “It never fails to happen. They’ll walk in, then say they really like the house, but then say…let’s see what happens next month.”
Montagliani, meanwhile, says she has learned a few hard lessons about the real estate market.
“For one thing, timing is everything,” she says. “Even a few weeks can make a difference in missing a window of opportunity. And that certainly may have happened to us."
Finally we are seeing articles reflecting what I expected; we would retest the 2008 lows. I realize none of the article is new news and just regurgitation of facts we know, but I think it is a factual harbinger of what is to come.
