Baron Realty - Brokers in Canada, Ontario, Quebec, Toronto, Montreal

During these uncertain times, as we are approaching the end of 2020, apartment buildings for sale in Ontario and Quebec are still few and far in between; in fact, apartments have become the most coveted asset class, because people can’t (yet!) live online.

The Bid Process

We have been successful in a few dispositions this year, and almost all of them involved a “bid process”. During a bid process, an asset is presented to the market, and a future date is set for reviewing offers. The “market” can be the market at large, or, the brokerage database of proven buyers, or, the most logical buyers for the asset – all dependent on what the building, and the vendor’s comfort level of exposure (owners of apartment buildings are often notoriously discreet). The offers can come on a template requested by the vendor (certain conditions), however, vendors must understand a buyer can still submit an offer, and the broker, under the listing agreement, is obligated to present it to ownership group, irrespective of its price and conditions. Of course, most buyers are serious about acquiring the building and will follow the instructions laid out, but some do not. Vendors are always free to reject or ignore any, or all, received offers.

Baron Realty’s Bid Process

Our bid date process involves analysis of current and potential NOI, analysis of rental upside and demographic trends for the area – all facts of the ultimate sale price, as well as projected building refinancing for the ultimate buyer. A tour of a few apartments and common areas is also agreed to by most vendors for proven buyers that have downpayment proof and/or an indisputable track record. The potential buyers often receive verbal price guidance (as per Vendor’s instructions). When offers come in, they are generally close together in price, giving the vendor the opportunity to have confirmed the market, as well as counter the offer that has the most favourable conditions. We generally present 5-10 offers during a bid process.

What if there are outliers?

Those one, or two offers that stand way above the rest in terms of price? Caution and deeper analysis are required. Sometimes the non-serious buyers are easy to identify: it’s the buyer that calls and says “I don’t have the time to see the building, put in the vendor’s price expectations, 3 months to finance, and 3 more months to close”. This is a buyer who is looking to tie up the building and raise the funds later, and/or renegotiate the price after a building tour/inspection (after all the other offers have gone away).

Things to Consider

Some other times though, it is the more subtle than that. Here are a few elements that you should consider in reviewing an outlier:

  • A long closing date – this should always be a red flag as to the funds that are available and the intention of the buyer to renegotiate the price in the future. Time is always against deals and the longer it takes for a transaction to close, the less likely it is to close.
  • No financing condition, yet the buyer refuses to agree to provide proof of funds – the gap between financing and purchase price has widened so much over the last 2 years or so, that the downpayment requirements have gone from approximately 30-35% to 50%+. This means, that for a $6M purchase price, the buyer would have to show a bank account balance of $3M.
  • A condition to visit ALL apartments aside from the inspection – there is no reason for a buyer, after doing an initial tour of 2-3 apartments, to request this as an additional inspection to the inspection clause. This probably means the buyer is looking for defects that he can point out in order to renegotiate the price, even before his certified inspector has been mandated.
  • No “time is of the essence” clause – legally, in offers without this condition, acting outside the specified delays has been sometimes proven acceptable in court. This is why, “time is of the essence” for delivery of deposit, or proof of funds becomes key to be able to move on to the next offer should the accepted one not work out.
  • Buyer’s refusal to provide a deposit – we have heard an “you know who I am, so I’m not providing a deposit” once on this one. The Vendor decided to accept this argument despite our advice. The buyer was ultimately unable to come up with financing as all of his many buildings were maxed out.

Be Aware

Be cautious of buyers who stand above the rest if you have done a proper bid process. The market decides the price based on many complex factors, not just NOI and location, but buyer confidence, banks willingness to finance, available cash, even current politics. If you have a current direct deal, look at it from more than just a legal perspective, to determine the true intention for closing. Generally, when a vendor “cleans up the offer” with proper conditions and delays in a counter-offer, the outlier simply “goes away”.

Baron Realty specializes in matching buyers and sellers of apartment buildings. Ramona works in partnership with Mikael Kurkdjian and a team of real estate professionals to bring the best boutique-brokerage services to the apartment transactional space in Ontario and Quebec.

Work with us. Contact Baron Realty Today!


Baron Realty / Immobilier Baron
400 – 6500 Transcanadienne
Pointe-Claire, Québec H9R 0A5
Telephone: 514 932 9000


Baron Realty, Brokerage
303-225 Duncan Mill Road
Toronto, Ontario M3B 3K9
Telephone: 416 301 3931

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