Three Potential Toronto Real Estate Situations
1) Location, location, location
Potential: You might think you’re only buying a house, but you’re actually buying into a lifestyle that’s associated with the neighbourhood. And whether that neighbourhood has access to the TTC, the right schools nearby and is convenient to shopping and services all adds up to value — value that is likely to be maintained regardless of the specifics of the house or even the market. If the real estate market tanks, better locations will never be hit as hard.
Reality: Next-door to that location, location, location can be almost as good. In Toronto’s currently red hot real estate market, many prime areas have been priced out of reach of the average buyer. And that is starting to push people with smart money into adjacent neighbourhoods, so that the desirable neighbourhood starts to spread.
2) Always buy the worst house on the best street
Potential: As a renovator, buying the worst house on the best street is a great idea, because it allows you to quickly boost equity or profit (depending on whether you’re staying or moving on). Buy at the top end of your street’s value and there won’t be much you can do to boost that value. Plus the reno route can be your gateway to an area that would otherwise be financially out of reach.
Reality: If the idea of dedicating your weekends to home improvement projects makes you shudder, this potential will quickly ring false. And it doesn’t apply if there’s a problem with the house that can’t easily be addressed, such as an oil tank buried on the property or a railway track that runs through the backyard.
3) Price to sell
Potential: What this means is as much debated as pricing strategies themselves. Yes, you want to price to sell — but what is the right price? Some sellers deliberately price low to encourage a bidding war. It can work if the house is near-perfect, in excellent shape and in a desirable neighbourhood. Other sellers prefer to price in accordance with the highest sale on the block. They think that the neighbour down the street sold for half a million, so their house is worth at least that much.
Reality: Both routes are risky. Going low in the hopes of sparking a bidding war can just as easily backfire, leaving the seller with offers that don’t exceed the too-low price, while pricing too high can mean you might just have to cut the price later. Not surprisingly, the experts suggest… consult with an expert, a real estate agent. Have the house appraised by one or more realtors and ask for a run-down of what other homes in your area have sold for. Then make a cold-eyed comparison: how does your house really stack up?
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