The spring market really has started early this year and with it (finally), an influx of Toronto lofts for sale. But there are good listings, great listings and not-so-great ones. And if there's one cardinal rule to remember whether you're buying or selling this year (or both), it's to know your average costs per square foot for the loft building in question. It's the only way to make fair comparisons and know whether you're paying market value or overpaying. Or in the case of a seller, to know whether your expectations are realistic or not.
Occassionally, we'll come across very small, boutique buildings where there's not enough of a sales history to determine these stat's or the last sale was too many years ago to be relevant today. But for the most part, any Realtor worth their salt should be able to tell you what the going market rate is in a particular building and if the unit in question warrants a premium or not. And also, how much of a premium is acceptable so that you don't throw away money.
Just as there's a flurry of new listings in this hot Toronto real estate market, there are also a ton of agents and not all Realtors are created equal. In a perfect world, everyone shopping for a loft for sale in Toronto or selling a loft would be working with a Loft PRO and not a generalist Realtor. And in an even more ideal world, all Realtors would be experienced, trustworthy and hard-working. And most are. But with 40,000+ Realtors in the GTA, there are a lot of weekend warriors who are little more than glorified taxi drivers to be frank, looking to make a quick buck, and not career professionals who know the niche Toronto loft market inside and out.
Case in point. Lack of transparency.
We're always amazed by agents who don't see the value in analyzing condos and lofts on a cost per square foot basis. Even worse, we had an agent (who will go unnamed) question our colleagues over at Condos.ca not so long ago as to why they publish cost per sqft price trends - that it was giving away too much information to the public, making it hard to pull the wool over their clients' eyes. Okay, they didn't use the phrase "pull the wool" but that was the gist of it. The mind reels.
Another case in point. And this is just one example of a host of overpriced listings that are on the market right now.
Our brokerage currently has a lovely starter unit for sale in the Toy Factory Lofts, pictured throughout. You can see the listing here. This is one of our favourite hard loft buildings in the city. You can read more about why we love the Toy Factory lofts here.
As a seller's agent, it's never great to see competitive listings hit the market the same week that you're posting your client's unit. But it happens. Especially during the spring market which again, has started early this year. We were shocked however to see a "competitive" listing crop up priced at over $800 / sqft. That's 25% higher than the current average selling price at the Toy Factory Lofts!
Now, obviously, some units sell above average just as others go below. But to even contemplate listing for that much above the building's standard price range, it has to be an exceptional space, something really rare, right? Except that it isn't. So, one of two things is going to happen here. Either the unit won't move and you'll have a very unhappy seller who has to pull and re-list, creating a negative stigma around their unit (not to mention the extra carrying costs, particularly if they want to switch Realtors and have to wait months for their contract to expire). Or, some poor sucker will pay above what it's worth, even by today's hot market standards (but certainly not 25% more).
On the off chance it's the second scenario, what happens to that poor buyer three or four years down the road come re-sale (this isn't a "forever loft")? Forget about making a profit, will they even break even once fees are factored in?
So many people are nervous about market moderation or a condo crash but the truth is, this is the single biggest reason people lose money in real estate - simply paying too much on the purchasing end. You need to do your research and work with someone who really knows the market and how to negotiate, not just someone to drive you around and fill out paperwork.
Our advice today is, whether you work with us or another team (and clearly, we hope you choose us!), work with a Toronto Loft expert who really understands the local market and the specifics of the loft building that you're selling in or hoping to buy in. Ask the right questions when interviewing agents. And push them to release information on average cost per square foot of recent sales in the building before agreeing to any price.