If you think it’s hard to distinguish Thing 1 from Thing 2, try figuring out what’s going on in the real estate market now. Stand on one side of the street and you could be in one market. Stand on the other side of the street and you could be in another market. Some people have been saying “Houses seem to be selling really quickly” and others have been saying “Boy! Houses seem to be sitting on the market for a long time.” They’re both true. Some houses in central Toronto are selling quickly and some are sitting on the market for a while. (Keep in mind that anything longer than a week these days seems like a long time to most people. Especially people who don’t remember what the market was like before it started its twenty something year run of rising prices when it was common for homes to take anywhere from two to six months to sell.)

It’s no wonder buyers, sellers and many of their Realtors are often confused these days. This is a hard market to understand, let alone predict if a house will sell quickly, take time to sell, sell for a low price, sell for a high price or attract multiple offers. A big part of my job is figuring out what’s going on in the market so I can give my clients the right advice. So I have a theory about what’s going on now. It’s not scientifically proven or guaranteed to be accurate within 2%. It’s based mostly on what I’ve been observing and on my gut feel. Now, you may scoff at me for going public with a theory based on my gut feel, but after twenty seven years in the business specializing only in residential real estate in central Toronto, I feel like the wizened old fisherman who has hunches about where the fish will bite. He’s not always right, but he rarely comes home with an empty boat. Here’s my theory:

It’s as if there are two markets now – the Hot Market and Balanced Market. Keeping in mind there are three main variables in every sale – the seller, the buyer and the home – let’s look at each of these markets:

The Hot Market

Hot Sellers are motivated to sell. Some of the reasons they may need to sell are because they’ve bought a new home and can’t carry two homes, are moving out of town or have small kids and it’s too much of a hassle to have their home on the market for any length of time.

Hot Buyers are motivated to buy, perhaps because they’ve already sold their home, are moving here from out of town or are tired of looking for a new home. They’re often willing to pay some sort of a premium to get a home they really want.

Hot Homes are homes with:

• Wide market appeal (in today’s parlance this often means recently renovated).
• Minor negative factors (busy street, bad condition, etc.).
• Low list prices to indicate they’re priced to sell (and hopefully attract multiple offers).

Hot Seller + Hot Buyer + Hot Home = Fast Sale (Often, but not all the time.)

For a Fast Sale to happen, it’s often the case that all three variables are Hot.

The Balanced Market

Balanced Sellers want to sell, but don’t need to sell as quickly as Hot Sellers. They may not have bought a new home yet or they may be in financial position to carry two homes, at least for a certain period of time. It’s not that they want an unreasonable price for their home. They just want to make sure they do what they can to get the best price possible.

Balanced Buyers aren’t all that motivated to buy. They’re comfortable where they’re living and want to move, but they’re willing to wait for the right home at the right price and they take their time to think about each house to make sure it’ll suit their needs. (Some Buyers start out as Balanced Buyers and become Hot Buyers when they see the perfect home.)

Balanced Homes are homes with:

• Some sort of negative factors such as condition, location, layout, etc. which prevent them from having wide market appeal.
• Reasonable list prices to indicate they can be bought at the right price, but the Balanced Sellers aren’t desperate to sell.

Balanced Seller + Balanced Buyer + Balanced Home = Balanced Sale (Often, but not always.)

When a home doesn’t sell immediately, it’s often because all three variables are Balanced.

Of course, this is real estate so there are exceptions to the rule, like the Hot Buyer who flies into town and buys a Balanced Home that just came on the market or the Hot Home that somehow doesn’t attract a Hot Buyer and doesn’t sell immediately because no matter how wide a home’s appeal and how well it’s priced, the right buyer still needs to be in the right place at the right time for a Fast Sale to take place. It’s not unusual for luck to play a role in a real estate deal. But despite these exceptions and the unpredictability of whether Lady Luck will appear, this two market theory seems to hold up in more cases than not.

So if you’re thinking of selling, think about your situation and consider whether you’re a better fit in the Fast Sale or Balanced Sale market. That’ll help you formulate the best strategy to achieve your goals. And don’t say “I know my home has negative factors, but I want to price it high and I want a fast sale.” That’s not likely to work. You have to be realistic unless you’re hoping for a miracle.  

If you’re buying and see a home you like and are trying to figure out how quickly you need to move on it and how much you should pay, look at the three variables. They should provide you with some good clues about what to do. (It can be difficult to find out the Sellers motivation, but do your best.)

It’s a tough market out there. You’ll really benefit from having the right Realtor on your side. So as always, if you or someone you know is thinking of buying or selling and would like to receive the kind of help that involves honest answers, straightforward advice, no pressure and being treated like family, please free to connect with me. I’m always happy to help. Thanks for reading.