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Builder Beware
When to cut and run: a cautionary tale about tear-downs
THE SELLER
In 2006, Alex Kochanov, the 48‑year-old proprietor of Avalon Custom Homes, purchased an 1886 Gothic Revival cottage on MacPherson Avenue. It was one of the oldest homes in the area, but it was dilapidated, and he intended to tear
it down. To placate city planners and preservation types, his firm designed
the new house—a three-
storey detached, with four bedrooms, five bathrooms and a basement nanny suite—to include a brick and stone façade that mimics the original.
This was Avalon’s 15th build in the GTA. Most of Kochanov’s houses sold within 45 days, at or above asking. Not this one.
Where: MacPherson Avenue, between Yonge and Avenue Road
Listed at: $2.199 million on May 12, 2008
Sold for: $1.375 million on February 28, 2009
Days on the market: 292
The crash factor: Though the downturn is now officially pegged to last October, the market started dipping as early as January 2008, with high-end homes hit first and hardest. Kochanov listed the MacPherson house in May 2008 for $2.199 million. A month later, he reduced it to $1.999 million, then to $1.95 million. In the fall, with the crunch in full swing and no significant offers, he dropped it again, to $1.65 million.
The gimmick: On December 29, Kochanov signed with Vera Gyenes of Royal LePage, who took new pictures, set up a virtual tour and, at her client’s suggestion, re-listed the house for $1 to foment multiple offers. They tumbled in, but the highest, at $950,000, was well below cost (Kochanov had paid $675,000 for the lot with the old house on it), so they upped it back to $1.575 million in mid-January.
The quasi-offers: One couple came to an open house—there were about 10—and liked the place but were leaving for vacation, so they backed off. In early February, a bargain-hunting, cash-strapped couple offered $1.5 million in the form of a three- year rent-to-own scheme. Kochanov was willing to consider it, but the couple’s financing fell apart.
The sale: In late February, the vacationing couple returned and offered $1.35 million. It was low but in the ballpark. Over the next 24 hours, negotiations broke down; in desperation, the agents offered to reduce their commissions (to 2.2 per cent each, according to Kochanov). “The house is standing there empty and eating money every day,” Gyenes told Kochanov. “It’s better that we just cut our losses.” The selling price meant a loss of 80 grand, but Kochanov finally agreed.
Photograph of Kochanov by John Cullen
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