Multiple bids on rare, hard lofts or units in boutique buildings in the best of neighbourhoods have been commonplace for some time now. But things have gotten so crazy in this early spring market, Toronto real estate feels like a game of never have I ever.
Never have I ever seen so many multiple offers on Toronto lofts for sale. Never have I ever seen sellers not bothering to stage their unit because they have such a strong upper hand. Never have I ever seen so many hold for offer dates on lofts for sale in Toronto rather than this being the exception, for an exceptional unit. And for listings that don’t have hold for offer dates, never have I ever seen such a scramble by buyers to get in and view the units on day 1 or 2, at times leading to a multiple offer situation anyway (we see this more for units priced under $600k).
If you’re looking to buy a loft this spring and struggling to find a place, don’t lose hope. More than ever, the right Toronto loft is a really smart investment that can grow your personal wealth fast and give you a great place to live. But you need to accept that the rules of the real estate game have changed and with that, so too must your buyer tactics.
Here are some tips for scoring a great loft in this crazy, hot market.
If you’re looking at a price point that’s desirable to a large market segment, in a popular area – say, a loft for sale in Toronto under $500k, minutes to downtown – move fast when a new listing crops up.
It’s no secret that most buyers find their own listings online and then send the listing / MLS # to their Realtor. If you forward a hot new listing and your agent tells you that they’ll take you to see it in a few days time, push to see it the same day whenever possible. Your Realtor is working for you, remember, and has to play by the new rules of the market and that means moving much faster than they’ve ever had to. So don’t feel bad about pushing to get in on a hot unit, pronto.
This lesson of you gotta move fast works both ways. You probably have a full schedule with work, family and social commitments. But when you’re loft hunting, you need to be able to get in to see a place quick and if there’s no offer hold back date, you’re wise to table your offer stat. Don’t give other buyers a chance to top your offer. That means that your work and social plans will likely need to take a back seat for a day or two.
Great unit in the Merchandise Lofts, pictured here and in our lead image, asking $609,900. SEE LISTING
Moving fast is much more critical for buyers searching at lower price points because there are a heck of a lot of first time buyers in the market right now, competing against you. But a truly rare unit at a high price point can also sell quickly.
You also need to make sure that your deposit is readily available and that you can cut a bank draft or certified cheque quickly, as some sellers are asking for it with your offer, before you’ve even won the bid. Such are the new rules of the Toronto real estate game.
If your money is sitting in a savings account or long-term investment that doesn’t allow for certified cheques or bank drafts, we advise that you transfer your estimated deposit amount over to your chequing account when you begin your property hunt. You may not have the luxury of waiting a few banking days for a transfer to occur when making an offer, particularly if you’re in a bidding war.
Going hand in hand with the above, just because a seller’s agent says that they’re waiting until next Tuesday to receive bids, they can still sell the loft out from under you (and all of the other interested parties) if a strong bully offer comes along.
Now, any reasonable agent will call other interested parties and give them the opportunity to table a bid early as well. But this depends on two things: one, that you’ve already viewed the unit or made a booking so that the seller’s agent knows you’re potentially interested and two, that you’re dealing with a reasonable agent on the seller’s side and an educated seller.
Shockingly, we’ve seen “bully offers” that were less than what our clients were prepared to pay. If the seller doesn’t realize how much they can get for their unit, they may think that an offer of asking or a few thousand above is great and jump at that “bully” offer.
And an agent who doesn’t have the best interest of their client at heart may also jump on that offer without informing other buyers’ agents, in order to get the deal done fast. The reality is, an extra $10k or $15k at 2.5% doesn’t make much of a difference to the Realtor’s bottom line. It’s their client who loses out, along with the other bidders left on the sidelines who may have happily paid more than the final sales price.
Thankfully, this doesn’t happen often but it does happen. The lesson here is that, when a really hot loft hits the market, get in to see it stat or risk losing your opportunity to bid. Even when there’s a hold for offer date on the property, don’t assume that you have the luxury of time to wait until that date to get in, see the place and register your offer.
With the increase in bidding wars on lofts in Toronto, there’s also been an increase in firm offers. Even with a healthy budget, it’s hard to compete against others if you’re indecisive or have too many conditions; an offer riddled with conditions – particularly if one of those is conditional upon finance – can spook sellers.
We’re not saying that you have to put in a firm offer to buy a loft in today’s market. Nor should you if it’s not something you’re comfortable with. But you should ensure that finance isn’t one of your conditions. It does happen where buyers are unable to close because they couldn’t secure a mortgage and so it’s understandable why an offer that’s conditional upon financing isn’t terribly attractive to sellers.
We’ve advised our seller clients in the past to consider offer #2 when there’s only a few thousand difference if the conditions are fewer. So, get pre-approved and only bid on something you know you can afford.
Unit at the Philippe Starck ispired 75 Portland, asking $849,900. SEE LISTING
It also pays to do your homework in advance. Sit down with your Realtor and review comps in the buildings and neighbourhoods you’re interested in so that you truly understand current market values. That way, if your agent is advising that a particular unit is under-listed in price, you understand why.
The biggest disappointment for buyers these days is continually bidding and losing on properties when they’re offering asking price or a little above. This is because it’s not unusual to see the under-listing tactic of the freehold housing market being used on lofts as well. And even if a loft is listed at what the seller and their agent thinks is appropriate market value, there’s no crystal ball for these things and the unit may still sell well above list.
Frustrated bidders can bid emotionally and even when they know they’re over-paying by current market values, they may be okay with that just to seal the deal and get the loft they want. This happens more with rare lofts in boutique buildings where turnover is low (so buyers know they may have to wait a few years for a similar listing to arise, with prices continuing to rise in the meantime) and on units where there are not a lot of comps to help inform asking price. In cases like this, a unit can sell well above list even if it wasn’t intentionally under-listed.
Some aspects of the market, like an emotional bidder paying way over list and knocking you out of the running, are uncontrollable and so try not to stress about them. But if you’re properly prepared to buy in terms of having your financing sorted with mortgage pre-approval and you’ve done your research on the building in advance, you’re much more likely to be able to make a viable, attractive offer fast, that will entice the seller.
Being flexible on neighbourhood will go a long way in helping you get a foot on the Toronto loft ladder, particularly for first time buyers with tighter budgets.
Toronto is a city of neighbourhoods and we all know that some neighbourhoods cost more than others to buy in. This is due to concrete features like schools but also more qualitative attributes like brand image. The premium of some neighbourhoods is even more apparent in the loft market - particularly with historic conversions - as there may only be one or two loft buildings in a particular, hot 'hood. With such low stock and huge demand, it’s even more of a seller’s market than the freehold housing market in certain pockets of the city.
Even if you can afford the premium that comes with a popular building in a prime neighbourhood, it may take a long time for the right listing to hit the market if your geographic focus is very small and so being flexible on location may be necessary if you want to make a move this year.
Rare listing in the Annex's Croft Lofts, asking $1,488,000. SEE LISTING
If you’re not in any hurry and you plan on staying in your next loft for 10+ years, then it’s probably worth biding your time for the right listing to hit even if it takes a year or two. But for the majority of buyers, if this is your first or second home purchase however, it pays to be flexible on neighbourhood. Remember that this is your first or second home, not your forever home. The dream loft in the dream location will come in time as you climb the property ladder.
Long gone is the era of the generalist Realtor. The loft market is different from the housing market in Toronto and it’s also different than the general condo market. So, whether it's with us or another Loft Real Estate team, we encourage you to hire a Loft Expert when buying or selling a Toronto loft.
You want to work with someone who specializes both by property type and neighbourhood, as well as someone who understands the history and features of the specific building you're buying or selling in. This isn't something you can learn by reading a few articles and pulling comps.
Our team of Loft Real Estate Agents have worked for years buying and selling Toronto lofts and other, unique properties. Put our loft know-how to the test by calling us in for an interview to see if we’re your right Realtor match.