Toronto Star

‘HGTV Ef­fect’ warp­ing buy­ers’ ex­pec­ta­tions, real es­tate agents say

They lament the ma­jor fo­cus put on ren­o­va­tions, decor

- ALEXAN­DRA POSADZKI THE CANADIAN PRESS Canada News · Consumer Goods · Real Estate · Business · Home & Garden Television

When Toronto real es­tate agent Derek Ladouceur walks into a home with first-time buy­ers, he tries to get them to look past the cos­metic fea­tures.

“We get so hung up on stuff like stain­less steel ap­pli­ances,” Ladouceur says, re­call­ing a cou­ple who be­came fix­ated on a home be­cause of its shiny, fresh-look­ing kitchen.

“Some buy­ers are kind of tricked into cer­tain things. It’s the role of the real es­tate agent to talk them through the pros and cons of the things they’re see­ing and make them aware that, yes, it’s a stain­less steel fridge but that stain­less steel fridge costs just as much as a white fridge.” Dubbed the “HGTV Ef­fect” by some agents af­ter the tele­vi­sion chan­nel that fo­cuses on home im­prove­ment shows, a grow­ing num­ber of buy­ers are splurg­ing on homes sim­ply be­cause they’re decked out with gran­ite coun­ter­tops, stain­less steel ap­pli­ances and a fresh coat of a trendy paint colour.

“The in­flu­ence of all of th­ese tele­vi­sion shows has re­ally hit the main­stream buyer,” says Des­mond Brown, an­other Toronto agent. “They want what they see on tele­vi­sion.”

Brown says spend­ing as lit­tle as $20,000 to $30,000 to ren­o­vate a kitchen or fin­ish a base­ment, and hir­ing a stager to re­move clut­ter, re­place light fix­tures and lighten up the walls, can boost a home’s sale price by as much as $150,000 in Toronto’s real es­tate mar­ket.

But mil­len­nial home­buy­ers are more in­ter­ested in buy­ing the fin­ished prod­uct than a house that needs work — even if it means pay­ing a pre­mium for it.

“There’s no de­layed grat­i­fi­ca­tion for this gen­er­a­tion,” says Brown. “They want it now. A lot of them can’t see the po­ten­tial of a home.”

Ara Mamourian of Spring Re­alty Inc. says sky-high home prices and the avail­abil­ity of cheap credit are par­tially to blame.

“Right now, prices are so high in Toronto that buy­ers can’t af­ford any ren­o­va­tions,” Mamourian said.

“But what they can af­ford is a big­ger mort­gage. So if they see some­thing that’s com­pletely fin­ished and ready to go and it looks fan­tas­tic and it sparkles, they’ll pay all kinds of money for it.”

The com­bi­na­tion of the red-hot spring mar­ket and a grow­ing fix­a­tion on cos­metic touches is also boost­ing busi­ness for Toronto’s home-stag­ing com­pa­nies.

“This spring is ab­so­lutely crazy,” said Ella Zetser, whose com­pany the Last De­tail Home Stag­ing, has pre­pared more than 3,000 homes since its in­cep­tion a decade ago.

“The mar­ket is just boom­ing. We’ve never, in the whole time we’ve been stag­ing, been this busy.”

Although it varies depend­ing on the home, Zetser says an av­er­age stag­ing job by The Last De­tail costs an av­er­age of $3,500. In or­der to win over clients, some agents are pay­ing for stag­ing out of their com­mis­sion fees.

“There are 60,000 agents in the city of Toronto,” says Ladouceur. “The only way to sep­a­rate your­self is by of­fer­ing ser­vices that other peo­ple are not of­fer­ing.”

The pop­u­lar­ity of home ren­o­va­tion shows has also given some buy­ers the mis­taken no­tion that it’s easy to “make a quick buck” flip­ping homes, says Mamourian — of­ten with dis­as­trous con­se­quences.

“All of th­ese DIY-ori­ented shows make it look so easy,” he says.

How­ever, the pro­fes­sion­als ren­o­vat­ing homes on tele­vi­sion have a host of re­sources that am­a­teurs don’t have ac­cess to, such as cheap labour and whole­sale prices for ma­te­ri­als, Mamourian says.

“Buy­ers are go­ing into homes that need work and they’re un­der­es­ti­mat­ing the cost and the amount of time it takes to do the work, be­cause they’ve seen a one-hour show where the whole house gets flipped, and they feel as if they could do that too.”

An­other chal­lenge, at least in Toronto, is that even fixer-up­pers are sell­ing for record-high prices, leav­ing vir­tu­ally no mar­gin for ren­o­va­tors.

“A rookie in­vestor will bid on a house, get it for a crazy amount of money, spend an un­be­liev­able amount of money ren­o­vat­ing it and then list it for way too much and it doesn’t sell,” Mamourian said.

“Then they just re­duce it down to the point where some­body fi­nally buys it and they lose ev­ery­thing they’ve put into it.”

 ??  ?? Bryan Baeum­ler, Mike Holmes and Scott McGil­livray all have pop­u­lar ren­o­va­tion TV shows on HGTV.
Bryan Baeum­ler, Mike Holmes and Scott McGil­livray all have pop­u­lar ren­o­va­tion TV shows on HGTV.

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