Tuesday, January 22, 2013

A Story: Toronto Real Estate and the Anxiety of Bidding Wars

Last night, we put down an offer on a house.

The idea of buying a new house is pretty fresh. It was just last week that we finally let go of the idea of a major, second floor renovation and, in the same breath, acknowledged that our cute little bungalow was not going to be sustainable for very much longer. In a way, it seemed almost serendipitous that an old, two storey, semi-detached house with plenty of work to be done would come on the market well within a price range that would allow us to keep our bungalow, increase our rental income, and, in the future, provide the perfect space to grow into.

The house is split into two, a main floor/basement unit, and an upstairs second floor unit. Its layout, though, would, truly, make it a simple matter to convert it back to a single family home, a home full of plenty of room for the Husband and I, our puppies, and whatever little tots we add to our numbers at some point in the next five years.

There were lots of things that didn't work about the house too. It has no parking. The backyard is cute, but tiny and full shade, which meant any hopes of planting another garden were dashed. The basement is low, which is unfortunate since the only bathroom for the main floor unit is down there. And, of course, everything is rough, rough, rough. There's tens of thousands of dollars of work that needs to be done. We toured the place on Friday. As we sat in our car afterwards, absorbing all the potential we had seen, I dug in my heels, forced our conversation down a cautious road. By the time we went to bed on Friday, we had agreed: there were too many uncertainties, too many compromises.

But that price!

The house was listed at $299,000. I'm aware that not all of my readers will fully understand how low that is. To put it in perspective, there are maybe a dozen houses listed at $299,000 and under in Toronto. Most of them are tiny 400 square foot fixer-upper bungalows on tiny lots that make them unattractive to builders. The remaining are run-down houses on incredibly busy streets. We knew the house wouldn't go for $299,000. We knew it was a strategy to start a bidding war. But, as we kept thinking about it, as the problems seemed to disappear, as the numbers crunched beautifully, the idea of letting the house go without sending even a feeble offer at it seemed, well... wrong.

But, here's the catch. The unfortunate, sad problem with the housing market and bidding wars. In order for it to feel like a good idea to put in an offer, I needed to get excited about the house. I needed to want it. I don't have a business mind that can focus purely on the transaction. In order to be ok with promising someone I would spend that amount of money, in order to agree to send my life into chaos, I needed to get emotionally attached to the house.

I'm sure you can see where this is going. By Sunday afternoon, I found myself sinking into emotional attachment to a house that was not mine. I made plans for the new kitchen layout. I figured out all the walls we would knock down. I dreamed of the closets we would put in and the rugs we would buy for those floors.

Yesterday was torture, waiting for the news that wasn't going to come until well into the night. In early afternoon, when we submitted our offer, there were 4 other offers. I began bracing myself for disappointment. By 7, I heard news of 14. By 7:10, the last few had trickled in and the number was 17. At that point, I already knew our offer wasn't going to cut it, but I was still holding out some hope that the housing market would surprise me.

I wish I could throw a twist at you right now and say the housing market did surprise me. I wish this could be an excited, happy announcement that we are now homeowners times 2.

But I can't.

I'm ok with it this morning. Content. Ready to move on. What we're moving on to (renovations? further house hunting?), I don't know.

(All photos were pulled from an old listing for this house on Property Guys. Apparently, the seller tried, unsuccessfully, to get rid of the house approximately a year and a half ago. He didn't change anything since then.)

23 comments:

  1. holy guacamole! this is a shocking post for 8am! $299,00 though?? i dont blame you for trying. I got my place in a bidding war. 8 offers on a tiny 394 sq ft condo. Toronto is insanity!!

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  2. I love old houses, but this house just doesn't do anything for me - I can see why it didn't get you excited! Although that breakfast nook is cute.

    Toronto prices are outrageous, eh? We'll probably get less than $299,000 for our fully detached house in the country, even after it's been fixed up.

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  3. Wow! I find it so interesting to hear the flip side of the Toronto real estate market, since we were the sellers in a situation like that in the fall. We got 8 offers on our house, and I must say, I really felt bad for the buyers! It seems so unfair. The buyers of our house had been looking and losing out on bidding wars for a year. But $299,000 is a ridiculous price for a house in Toronto. It must have sold for near double that (although I'm not sure where it is exactly). I can see the potential that you saw in the house, but it really does need a lot of work! And not just DIY stuff. You've got a great strategy though, and you are obviously keeping your head through this. It will work out for you.

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  4. It was meant to be. You guys will find the right place, at the right price, and you will be excited about it without having to force it.

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  5. It did get me excited though! I guess I didn't explain that quite clearly... We wouldn't have put in the offer if I hadn't been excited about it, even emotionally attached. I had already figured out all our plans! That breakfast nook was going to be our office, we were going to decorate the basement to be a beautiful, cozy bedroom suite... *sigh...* it was not meant to be and I will get over it!

    Yup, Toronto prices are outrageous! Obviously, one day, we'll benefit from that since we got an awesome deal on our little bungalow, but right now, it's hard to see. I feel really badly for the first time buyers who are trying to get into the market! I'm sure most of the other bidders on this house were exactly that!

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  6. One day, maybe we'll be sorting through multiple offers making just such a decision!

    I doubt it would have gone for near double asking. The house honestly isn't worth $600,000. Once fixed up and beautified, it may be worth $500,000, but I hope whoever won didn't pay that much for it. It may have gone for $400,000, but even that, I think, is way too much. It's a crazy market out there.

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  7. Yes, I keep reminding myself of this. It can just be so confusing, trying to figure out what the right decision is when it comes to real estate and the housing market.

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  8. Yes, I keep reminding myself of this. It can just be so confusing, trying to figure out what the right decision is when it comes to real estate and the housing market.

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  9. Yes, I keep reminding myself of this. It can just be so confusing, trying to figure out what the right decision is when it comes to real estate and the housing market.

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  10. That IS cheap for Toronto. But yeah, you can't escape those terrible bidding wars, especially in a grand city. Don't worry much...another house will come along. On the bright side, spring is nearing and there will be a ton more options then.

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  11. That's so exciting. I'm glad you were able to quickly see the potential and get excited. I feel like that will be the case for a lot of houses out there that are selling for so little (relatively speaking, of course), they may not instantly excite you but you'll know with your head that it's right. I'm keeping my eyes peeled for houses - have you looked at all near Little Italy? Or is that way too outside your desired area?

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  12. Wow, $299,000 in Toronto? That is unheard of... though I would love to know the final selling price. We were invited to offer on a friend of a friend's house, right in the upper Beaches, starting at $350K. By the time we'd considered and thought it through, they already had offers in the low 700s. Completely out of budget, but probably not unexpected in that neighbourhood... (of course this was a few years ago, before things started heading back down again)

    The right house is out there for you, though... and hopefully that one will have parking, which is a must have on my list. :)

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  13. Hey Jeanette. I'm not sure if you follow the Toronto real estate blog The Mash, but they did a post on this house. Here's the link (I hope it works!)
    http://themashcanada.blogspot.ca/2013/01/and-it-went-for_9790.html

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  14. This was their original post.
    http://themashcanada.blogspot.ca/2013/01/571-jones-avenue-blake-jones.html

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