Why is this GTA house listed for $1. How zoning affects real estate

#GTAHomeHunt is a weekly series from the Star that gets into the details of real estate listings in Toronto and the Greater Toronto Area. Have a tip? Email us at [email protected]

Listing Price: $1

Neighborhood: New Toronto

X-factor:

Zoning is what makes this find special. The house at 3154 Lake Shore Blvd. W. is in a zone that allows for property to be sold as both residential and commercial property. Since the house is on a popular street and very close to Humber College in the same neighborhood, it could fulfill many uses.

Three storeys tall with three bedrooms, two bathrooms and located around an abundance of amenities, this row house has a lot of potential in a lot of different ways. Also, existing on one of Toronto’s main streets 3154 Lake Shore makes owning a car in the city a much more viable option for a resident.

If you’re new to the real estate market in Toronto, you might be wondering, how is it possible for a home to be listed for $1? We brought in our expert, realtor Othneil Litchmore, to better understand how a property could be listed for a loonie.

Although it's currently set up as a single-family residence, 3154 Lake Shore Blvd.  W. is zoned for both residential and commercial use.

Why it’s priced this way:

One dollar won’t buy you a home in Ontario, let alone Toronto. The key to 3154 Lake Shore’s pricing is the zoning of the building, it’s both residential and commercial. While the price might come with a little bit of reverse sticker shock Litchmore explains that the price tag isn’t a marketing strategy, it’s an invitation to a negotiation.

“What’s happening here is, ‘Hey, this property is income producing, but it really depends if you can present a good plan to our seller, then we’ll sell it for that price, which you (propose) based on the income ( you think) it will produce,’” said Litchmore.

With commercial listings, $1 list prices are more common.  Litchmore explains that interested buyers work out the price based on the earning potential they think the property will have.

For a commercial buyer, Litchmore explains that they work backwards in trying to figure out the value of the property.

“So, if it’s like a law office, the person has to say, ‘OK, what’s my operating costs and the clients I can see? How much does it cost to renovate the space?’” said Litchmore, “It’s like a math equation to work backwards and say, ‘OK, I’m gonna put $2 million down for this thing.’”

The property's potential price and dual use can put the seller in a unique position of negotiation.  However, the sellers eventually landed on an asking price and later updated it to $899,000.

While Litchmore recognizes that 3154 Lake Shore is currently a residential listing, the home could be worth more as an asset, perhaps as rental units considering its proximity to Humber College’s Lakeshore campus.

The property’s potential price and dual use can put the seller in a unique position of negotiation. However, the sellers eventually landed on an asking price and later updated it to $899,000.

The interior to 3154 Lake Shore Blvd.  W.

If you are an end user (someone looking for a place to live) and came upon a similar listing that was open for negotiation, it still might be more worthwhile to look elsewhere, as the final price can escalate quicker than you think, and you may be missing out on the full potential of the house.

“It wouldn’t be worth it because the real value is in its income producing potential. So, most end users if you want to live in a house, you’re not living in it because it can produce income, you’re living in it because you want to live there,” said Litchmore, “So you wouldn’t look at something like this because the price that this will ultimately sell for will be based on its ability to produce an income.”

The interior to 3154 Lake Shore Blvd.  W.

Any other tips for those looking at places like this?

Litchmore stresses that homes like these are most beneficial if you’re an investor in one form or another. For this home, someone who’s invested in student housing.

“Anywhere around the colleges: around Centennial, you’ll see (them in) Scarborough, you’ll see downtown, York University, you can find similar sort of set-ups around those places,” said Litchmore.

The interior to 3154 Lake Shore Blvd.  W.

In the case of commercial buyers, “Along the major thoroughfares: St. Clair, Eglinton, Lawrence, Queen, King, Bathurst, Dufferin and like any major street, you’re gonna find units similar to this.”

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