382 Merton St
An investor client of mine had tasked me with finding him a “steal,” and as I am sure you can imagine, that is not an easy feat. Many investors look for the diamond in the rough, but since so many are looking for it, it makes it that much harder to find.
We set off on a hunt to look for undervalued properties in neighbourhoods with good growth potential. Unfortunately for us, we had tons of competition. Our first find was a gut-job in Riverdale, which was priced far below the price expectations, and we ended up in a bidding war with 23 other buyers. However, when looking at investment properties, numbers are king – we are working with strict margins and cannot let emotions influence offer prices.
A week later, we came across another great house in Playter Estates, and again ended up in a bidding war. As much as we try to avoid properties that are priced for multiple offers, it was difficult to do so given the market conditions for what we were looking for. My client began to lose hope that he had perhaps missed his chance to find the right property for the right price, and lo and behold, the right house came up. Again, the house was listed far below what would be considered fair market value and given the neighbourhood it was likely that it would sell over our budget. My client decided they didn’t want to get into another bidding war, so we did not submit an offer. Several offers were registered on offer night, however several days later the listing still had not been updated. I called the listing agent, who I happened to know through previous interactions, and found out that the property didn’t sell because every offer they received had terms that made no sense given the property condition.
This house was an estate sale being offered in “as-is, where-is” condition. This means the seller can’t provide any guarantees as to the state of the house. Yet, all the offers that came in had clauses guaranteeing all appliances would be in “good working order.” Now, I had seen this house – you did not want to keep the appliances. The house was in dire condition and needed to be completely gutted – pieces of the ceiling were on the floor; the appliances were hanging on by a thread – so the clauses made no sense. The agent told me they were prepared to accept an offer and asked the buyer’s agent to simply remove that clause and the house was theirs – they refused. The agent, who is extremely established in our community and a great agent, told me that he had never, in his decades in the industry, dealt with such inexperienced and incapable agents, and that he and the seller just want to be done with the listing. They had been getting nonstop phone calls about whether the house had sold and what price they wanted.
So, we brought them an offer, but our offer price was far below recent sales because that was the number that worked for my client. After a round of back-and-forth counter offers, we had a deal. Ultimately, in this case the terms of the offer were more important than the price. We had a clean offer with no conditions and a very quick closing, which the seller was hoping for. I know many people are cynical about how much relationships and rapport actually impact a negotiation, but they really do. If I had not had the rapport with the agent and taken the time to understand what the seller was truly looking for, we wouldn’t have been successful. And the best part? Every one of my colleagues came up to me in disbelief over the price we secured the property for, thinking it was a typo. The moral of the story: you may be looking for a needle in a haystack, but that needle is in the haystack. You need to be patient and diligent in looking for it, but if you are, you will succeed – and that’s just what my client did.
