pre-contruction

New Marketing Approach For Pre-Construction Condos?

Pre-Construction

3 minute read

July 29, 2020

I suppose I could have written this blog, but I felt like explaining it in person while comfortably reclining on a cheap couch that I’m ashamed to say I purchased from Bad Boy Superstore in the summer of 2018.  It goes well with the cinder-block wall in my office…

There’s only so much I can convey in a 4-5 minute video, while trying to keep it concise.  But the points are there:

1) Pre-construction condo sales have plummeted in 2020.

2) Developers are pushing forward in the second half of 2020 with many projects that could have, would have, should have been launched earlier this year.

3) The marketing for many of these projects is really snazzy.

4) Developers are going back to the well, with a new spin on an old approach, by sending information packets to thousands of agents across Toronto.

5) Prices aren’t being revealed in print.

Which point do you find to be the most interesting?  Or the most curious?

I’m frankly not surprised that pre-construction condo sales plummeted during a worldwide pandemic.

I’m also not surprised that a lot of new projects are being launched this summer, although I’m ASTOUNDED that projects like 28 Eastern Ave are selling for stupid valuations, as well as selling out.

The marketing for something like 36Birch is the glossiest, gleamiest, and most olfactory-pleasing as anything I have ever seen, but I honestly can’t think that buyers will be lured in by this.

Can they?

Developers are spending buckets of money for this.  Not just copy, design, and graphics, but the printing and shipping.  A box of 50-60 packets appeared at our office today, and I’m sure one appeared next door, and at our other brokerages as well.  What does that cost?

Lastly, I cannot fathom how a buyer could flip through a packet like this, without any prices, and gain interest.

Those 3,000 square foot townhouses: are they $3,000,000 or $6,000,000?

How does this work from a marketing standpoint?

At the risk of repeating myself in today’s video, how can a developer launch a project with no pricing, and take a leap of faith that it will secure buyers’ attention, then interest?

Well, I’m going to assume that it works, since most projects sell out in Toronto.  I’m either the dumbest person in the room or the smartest.  Definitely the most cynical.

I remember about ten or twelve years ago, I was in Korry’s on The Danforth to buy some cheap dress shirts.  What were they – like 3 for $199 or something?  I asked the salesperson there about their suits, and he started talking about Hugo Boss and some higher-end brands.  I said, “What do those cost?” and he started walking away from me, motioning for me to come with.

“Come on, let’s go upstairs,” he said.  “I’ll show you.”

I stood still as he walked away, and asked, “So what do they cost?”

He said, “There are prices on each suit, come on, they’re beautiful, let’s go have a look.”

It was a sales tactic, I know.  But I wanted a simple answer.  A ballpark would suffice.  He wouldn’t give it to me, as it didn’t fit his sales method.

I lost the modicum of interest that I had in the suits, and I would never have dealt with that guy.  Ever.

That was probably the only time I was ever in that store, and it was surely the last.

Perhaps I’m making a mountain out of a molehill, but sometimes those small gestures or actions have the most lasting impact.

I have no idea why condo developers “launch” their projects without pricing, or why people fall into their trap.

I haven’t sold a single pre-construction condominium to a client in my entire career.  And this is but a single example of why I don’t like the way this industry works…

Written By David Fleming

David Fleming is the author of Toronto Realty Blog, founded in 2007. He combined his passion for writing and real estate to create a space for honest information and two-way communication in a complex and dynamic market. David is a licensed Broker and the Broker of Record for Bosley – Toronto Realty Group

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35 Comments

  1. Paully

    at 7:11 am

    I have purchased things in both Bad Boy and Korry’s, and found their respective service to be excellent, and the pricing very fair too. I did stay out of the rarified-air upstairs at Korry’s though.

    Interestingly, I received hand-written thank-you cards in the mail from the salespeople at both locations. I know that lots of sales training materials talk about the power of the hand-written thank you note, but most salespeople are just too lazy to do it. Bad Boy and Korry’s stand out in my mind because of it. I would, and have, gone back to both places happily.

  2. condodweller

    at 8:00 am

    Post pandemic?? Did I miss something? Aren’t we still supposed to stay at home and maintain a social bubble of no more than 10 and aren’t masks still mandatory in public indoor spaces? Does our southern neighbour not have over 4 million cases (54,448 new yesterday) just itching to open our border so they can come visit us? Note to self: wake up and go buy a preconstruction condo…

    1. Bal

      at 8:17 am

      Condo are going downhill

      1. condodweller

        at 9:17 am

        @bal are you referring to condo prices or is it an editorial comment about my writing?

        1. Bal

          at 11:09 am

          ii just read that Condo will be soon a buyers market……otherwise I am not a condo lover…lollol…never been and never will be….

    2. David Fleming

      at 10:31 am

      @ condodweller

      I use “post-pandemic” in the real estate sense, ie. the market slowed to a crawl in late-March and through April, but has now essentially gone back to “normal.”

      In no way am I saying that we are “post-pandemic” from a health and safety standpoint.

      I hoped that distinction would be made, but I appreciate you asking for some clarity here. Duly noted.

      1. condodweller

        at 10:55 am

        Fair enough David. Didn’t mean to come across snarky it’s just what you get when I make a quick off the cuff remark early in the morning….

        Having said that, I think even though we have declared a winner in our game, some commenters suggested that just because we have reached a new high doesn’t necessarily mean we are post pandemic even from the RE point of view. My arm can be twisted, very lightly, to agree with them 🙂

  3. Izzy Bedibida

    at 8:34 am

    I guess that they’re hoping that people will sign up and visit like David. Salespeople will try thier darndest to get them to “sign on the dotted line” by giving them a flashy fomo style presentation

  4. Verbal Kint

    at 8:37 am

    Guy who puts fake prices on all his listings says what?

  5. jeanmarc

    at 9:19 am

    Hilarious to hear a comment about Bad Boy furniture. I guess the name says it all! I must say the Brick furniture is almost no different (gone down hill over the past 10+ years). If anyone is looking for quality Canadian made furniture where they don’t advertise or sales pitch (I have not seen or heard any tv/radio ads), a company called Superstyle makes excellent furniture (select your own fabric/style and/or ready made) that actually lasts and reasonable pricing depending which retailer you purchase that sells their product line.

    1. David Fleming

      at 10:29 am

      @ J G

      Yes, this is true. Although I have sold one condo to an investor since I did this interview, but the point is still fair.

      The typical investor looking for a $550,000 downtown 1-bed, 1-bath, renting for $2,200 per month – these people have not been calling since March.

    2. condodweller

      at 10:57 am

      This is not surprising at all. Now that investors have seen that they can’t count on ever increasing rents, never mind falling, I can see why they might have gotten cold feet.

      1. Bal

        at 11:10 am

        Where is Chris these days….No comments from him…..Chrisssssssssss……..

        1. Chris

          at 11:38 am

          Haha I’m still here Bal, just been enjoying being able to socialize, at least a little bit, again.

          I’ll admit, real estate is doing well, better than most (myself included) thought it would.

          But I think it’s holding up for similar reasons as to why equity markets have rebounded in spectacular fashion, namely government and central bank stimulus and support.

          Personally, I wouldn’t be shocked to see both equities and real estate decline, once all this stimulus is wound down, assuming it ever is. Evan Siddall is still standing by CMHC’s predictions, so either he’s completely out to lunch, or he knows something we all don’t. Given his position, I would lean towards the latter.

          1. Bal

            at 12:48 pm

            Aww.there you are…..i was wondering what happened to you….thought you might have won the lottery…lollol…well I never thought and still don’t think house prices will come down with this low-interest rates…..i will only see the house prices coming down once interest rates are shift upward until then this party gonna keep going…lol

          2. Chris

            at 4:02 pm

            Maybe so, but looks like as long as government and central bank stimulus keep going, rates are going to stay low, which means equity markets are going to keep chugging higher as well. Those holding real estate win, those holding stocks win, and those who hold nothing lose. Sounds like a widening of inequality and a recipe for populism, but I guess that’s tomorrow’s problem.

      2. jeanmarc

        at 11:12 am

        The virus is causing a stir regarding living in a condo shared amongst hundreds of other residents with common spaces (elements). As stated in my previous post, my experience living in a condo was not pleasant (in a 2-3 year old Tridel).

        1. Clifford

          at 10:51 pm

          This is sensationalized nonsense. I live in a condo. I have no issue. I think the people talking like this don’t live in condos or are anti-condos for whatever reason.

          My condo has been excellent in dealing with the virus. No guests, no deliveries, everyone must wear masks, no use of the gym, etc.

      3. condodweller

        at 11:21 am

        Yes, but as commenters have pointed out, many people don’t have a choice. Besides, as long as people are observing suggestions i.e. continue to self isolate and wear masks in the common areas of the building, two per elevator with masks on, washing hands, not licking door knobs your risk really isn’t any higher in a condo than in a house.

        1. JL

          at 12:07 pm

          Agreed. With the common areas closed, there really isn’t all that much “extra” risk to get infected. You’re in a self contained unit after all, and while it might depend a bit on the condo design (# units, etc), typically it’s not like the hallways and elevators are constantly crowded with people.

      1. J G

        at 12:54 pm

        Thanks for sharing, The spike in Condos 2020 listing really sticks out!

      2. Appraiser

        at 3:40 pm

        Meanwhile the percentage of condos sold over asking has climbed to a screeching 34%!

        Freeholds are blowing the doors off at 49% sold over asking! https://twitter.com/areacode416

        What you see and what you read are not what’s happening eh @Chris ? Must be fake news.

        The month-end numbers are going to make you and Evan Siddall cry (again).

        1. Chris

          at 3:58 pm

          Sorry, are you trying to say that the Scott Ingram tweet I shared is fake news, and the one you shared is real news?

          Also, what happened to the bull trap you forecast in the equity markets, appraiser? If Evan Siddall and I are crying over real estate, you must be downright suicidal over the NASDAQ.

          1. Appraiser

            at 6:54 am

            What was your prediction again?

          2. Appraiser

            at 6:58 am

            Oh Yeah…the Dow is still down 10% – shhhhhh!

          3. Chris

            at 8:06 am

            Wrong. DOW is -2.8% YoY, S&P500 is +7.2%, NASDAQ is +27.0%.

            What was your prediction for equity markets again?

            Shhhhhhhhh!

  6. T

    at 4:13 pm

    I found the photos in the book frustrating. Who puts a photo in the fold between two pages? Yes, I get they’re trying something new. But this screams that their marketing manager was binge watching Selling Sunset or Million Dollar Listing LA while in isolation

  7. Max

    at 11:39 pm

    What’s with the antique hockey skates and tiny hockey stick in the background? Can we get the full story there please and thanx!

    1. David Fleming

      at 11:16 am

      @ Max

      The stick is actually an “ice polo” stick, which was the precursor to ice hockey. It’s stamped “SPALDING 1886” which I think is really cool.

      The stakes are circa 1920’s. I picked these up at an antique store in Jackson, Wyoming one summer. Before hockey skates existed, you would simply take this piece of wood mounted to a blade, and tie it around your shoe. That’s how people skated back then!

      The framed photo is an advertisement for men’s clothing from 1910 featuring gentlemen playing ice polo in suits. I picked that up in an online auction years ago and had it mounted and framed.

      All three items together are a really neat display, although the cinder-block wall in my office doens’t do it justice. I commandeered the largest board room in the building two years ago and made it my home, so I shouldn’t complain about the brick wall when I have 270 square feet!

  8. Appraiser

    at 2:57 pm

    Super low 10 year mortgage rates plus :

    “Getting Back on Their Feet: Folks worried about mass defaults from higher-risk borrowers can take some solace from this stat. Equitable Bank, a bellwether non-prime lender, reports that its percentage of non-prime mortgagors deferring their payments has dropped from a peak of 34% post-crisis to 9% more recently.”

    https://www.ratespy.com/people-are-locking-in-til-2030-at-record-low-rates-072915099

    1. Chris

      at 3:03 pm

      Literally the next bullet point:

      “Fencing Off the Cliff: Many lenders say six months of payment deferrals are not “sufficient,” reports the Financial Post. As the “deferral cliff” approaches, CMHC is now looking at “new tools” to help lenders and borrowers.”

      1. condodweller

        at 5:52 pm

        Main take away is that it seems whatever comes our way they are going to find ways to accommodate it. In other words that cliff will turn into a gently rolling hill…..we hope.

        1. Chris

          at 9:41 pm

          Yep, governments and central banks seem to be pulling out all the stops to keep things stable. It’s benefiting real estate markets and equity markets. Like I said above, those with assets win, while those without lose. We’ll see how well that goes down with the have-nots.

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