By: Dan Balm

Crazy Stuff I Hear At Parties

Tags: Balm Real Estate, Dan Balm, Toronto

I don’t do well at parties.  If I’m not in a corner talking about some concert I went to in the 90’s with anyone who will listen, or sitting on the ground playing with the house pet, I’m passing the time looking through the cupboards for olives.

The one thing I rarely do is tell people what I do for a living.  Not because I don’t like what I do, but real estate seems to be a polarizing topic at parties and it seems to bring out some pretty crazy opinions.  

And everyone looks to me to validate their opinions.  Where are those olives again?

Here are the craziest of crazy opinions I have heard lately:

1. “I know a guy who flips houses downtown for $______________ (insert peanut-low figure here) and makes $_____________ (insert lip-smacking figure here).  

Now here’s the thing: I had a boss once who was always about the numbers.  Show him the numbers, and he would let me do anything with the business.  If you want to flip homes, here are three number you need to know. 

     – land transfer taxes – if you’re buying a $600,000 home, you will spend $16,000 in taxes
     – reno costs – whatever you budget for renovations, add 20%.  That’s 10% for contingency and another 10% because, let’s be honest – you didn’t budget properly
     – real estate costs – when you sell the $600,000 property for hopefully $$750,000 it will likely cost you around $40,000 to sell it.

2. Part 2 to “I know a guy” (there are a hundred “I know a guy” stories BTW). 

The “I know a guy who can make it look like _____________(insert weird scheme here) so you don’t pay taxes”
Look, there are a whole bunch of ways to not pay those taxes, and there is no shortage to the lawyers and accountants who will do the deal and make it look clean.  If it were me, I would run as far away from those clowns as you can.  Their fast talking promises of scamming the government reek, and once you get that stench on you it won’t wash over easy.

3. The Hidden Gem 

“A friend of mine bought this thousand square foot condo by the Eaton Centre that has a view of the lake and the CN Tower and it was only $300,000.  The maintenance fees were only two hundred a month!”
Yeah, no she didn’t.

4. “Realtors drive the value of homes up.”

I would love to say that I wield such an influence on society that I can control home prices, sadly – I can’t even get the guy at Tim Hortons to give me a coffee with two cream.  While it is true that my duty to my sellers is to get them the best price for their home, it is the lack of homes on the market is driving the values up.  And hey, an educated buyer is going to pay what they can afford, not some blind number.

5. Any argument about the market crashing, or what home prices are going to do. 

I’ve written about this before, but let me paint the picture of the party conversation: you have two pretty smart people.  One says the market will crash, the other says it will keep going up.  Incomplete local economic data is presented, but rebuked and countered with conflicting and also incomplete local economic data.  Isolated (and sometimes unsubstantiated) home prices are presented.  The term “the condo boom” is used as a mic-drop, but doesn’t have the desired effect on the conversation.  China, Greece and Germany come up.  I hear “oil prices” being chimed in by someone.  The subprime mortgage discussion is introduced.  Someone innocently brings up Steve Carrell’s performance in “The Big Short”, but is shot daggers and wanders off.   People drink and change the subject.  Seriously, anyone see any olives?

6. The Rent Vs Buy argument.

There is always one guy talking about all the vacations he goes on, the clubs he goes to and the car he leases and he owes it all to renting and not buying.  If he is a real jerk, he is laughing at the guy who just bought a place in the Leslieville who shrugs his shoulders and laments in the fact that he has no money for a while.  He just drinks wine at home with his partner and their friends.  But as the homeowner walks away, there is always an under-breath “shame about all that tax-free capital gains you pissed away in Ibiza, though…” 

7. “I hate that there are so many condos”

I don’t know everything about condo development, but I have an opinion – and that is that building those structures is a GOOD thing.  Every crane you see in the sky represents 500-3000 jobs for workers in Ontario and homes for 200-500 family units.  It also injects 10 – 15 times the revenue originally invested into the local economies, to say nothing of the hundreds of millions of tax dollars generated.  So, yeah – sorry about your opinion of the change in scenery. 

To paraphrase one of our previous Prime Ministers, ’there are going to be a lot of bleeding hearts crying about the development in Toronto, all I can say is go ahead and bleed’ (I’ve got a similar opinion on the lack of jets allowed at Billy Bishop).

And then I regale the people in the kitchen with my memories of seeing Oasis at Wembley Stadium whilst stuffing my face (and feeding the family dog) with my newfound jar of olives.