Toronto is an amazing city that many Canadians want to live, work, and own property in. The most favoured choice is undeniably a Downtown Toronto condo, and many condo buyers are willing to pay good money for a gorgeous place that comes with the perks of living in the Toronto Downtown area. The vibrant Toronto real estate market, however, may make it hard for Downtown Toronto condo buyers to spot an overpriced home right away. Buyers may be more focused on the competition, the mortgage, and it can easily slip their mind to consider how much is too much. Plus, if you are not a real estate agent, it can be tough to tell what the fair market value of a condo is in the Downtown Toronto area.
Condo buyers deserve to get a fair deal on their condo purchase, and to avoid paying more than they should in the Downtown Toronto condo market, here are some signs on how to spot an overpriced Toronto condo.
Is the condo more expensive than similar condos in the neighbourhood?
Getting a deep understanding of how the market works is probably the safest way to understand real estate pricing. Since it can take a while to get there, having an experienced real estate agent help you understand the local market and prices is probably your best move. Using general home value calculators on the Internet can give you an idea, but beware, they’re algorithm-based and often too vague, so they may not give you accurate information. Many do not factor in the value of parking spaces, lockers, exposure and level of the condo unit in a particular building which all play into the price.
The best way to find out if a condo is overpriced is to compare it to condos of similar size and similar qualities in the same building and immediate area. It is called a Comparison Market Analysis (CMA), and it’s a tool that real estate agents’ use to get an objective perspective on market value. A CMA usually includes checking the prices of current listings and those that sold in the previous three months considering all factors that make up the asking or selling price. If the condo you are set on distinctively differs in price compared to similar listings in the area, and it hasn’t had any updates to back up the higher pricing, the chances are that the seller asks for too much.
Does the location justify the price?
Location is one of the main factors that determines price, and the sales price will highly depend on the address. Things like proximity to the city core as well as the amenities found in the area are usually factored in the sales price. Prices in Toronto differ from neighbourhood to neighbourhood, so make sure you know the average price in your top-choice areas to avoid paying more for a condo than what the neighbourhood can carry. Like houses, you want to avoid having the most expensive house on the street as that most expensive home sets the bar. Look up what each location provides for in terms of walkability and amenities (such as restaurants, shopping, parks, transit lines) to see if price suits what the location offers.
Over-improvements that added no or very little value
Sellers who put in the extra effort to make their home more appealing are often encouraged to take that step, but as a buyer you need to recognize if the renovation added any monetary value to the unit. There is a difference between cosmetic touch ups like fresh paint and staging compared to full bathroom or kitchen renovations. Also if updates feel more like a burden (e.g., hard for upkeep, non-practical, etc.), there are probably very few homebuyers who will be willing to pay extra for it.
As a condo buyer, you need to distinguish between updates that truly add value to a place and the redundant ones that are hardly going to improve your everyday life. For example, should you really be entertaining the idea of buying a place that has a brand new fireplace and pay extra for the update even if you don’t need or necessarily want one?
The condo seems to be on the market for ages
Downtown Toronto condos usually sell quicker than the national average, which makes it even more strange to see a listing sitting on the market for months, especially if it looks decent and attracts the eye. The chances are that the listing is overpriced and that the seller is not (yet) willing to sell for less than the asking price. Have your realtor check in with the seller or their agent to see if the home has received any offers. If it has and they were all rejected, you are probably dealing with an overpriced listing and an unrealistic seller.
For more info on Downtown Toronto condos, feel free to contact Reza Afshar here.