Toronto Real Estate Bidding Wars Return. Check Out Lauren’s Top 10 Buyer Beware List
June 1st, 2009 Categories: News Wire, Toronto Bidding Wars
May is a memory (yes, time DOES fly), and my Market Report on Toronto real estate statistics will soon be available. But I’ll go out on a percentage sign here and state that May 2009 was a very good month for Toronto real estate, all things considered.
Same Old, Same Old
Toronto Bidding Wars
Given May’s market activity, it’s no surprise that the local media is buzzing about the re-emergence of Toronto bidding wars. And yet, how can it be called a comeback when bidding wars never really went away? Just asking!
Let me recap what’s being spun: Houses are selling for significantly more than asking price, underpricing is happening and there are buyers who “would not have bid on the property if they knew the price was not realistic”.
And that’s what gives me The Crazy Eyes. The idea being promoted that Toronto buyers are so uninformed that they don’t recognize an underpriced listing. How can that be? Is it possible that “should be well-educated” Toronto buyers are throwing themselves under the bus? Well, somebody’s throwing someone!
Top 10 Toronto Real
Estate Buyer Beware List
There’s no need to be the Toronto buyer that’s taken in by the underpriced listing. If you’re feeling frustrated with your results to date (many offers, no house), maybe it’s time to re-think how the market can work. The following Buyer Beware tips are must-read:
- Not all bidding wars are the result of an evil conspiracy between seller and real estate agent. Sometimes a well-priced property is just that — well-priced — and it’s no surprise that the market recognizes a good buy when it sees it. The result of Intelligent Pricing is lots of attention from potential buyers, which often leads to multiple offers. You just might be the successful buyer. Or not, but if it’s in your price range you’re in the game for real.
- Some bidding wars ARE the result of an
evil conspiracyintentional marketing strategy to underprice the listing with the specific intention of generating buzz, bids and bucks. To be effective, they need you to be part of the buying circus, to create the buzz that powers the bids and bucks. It’s so simple: Don’t go to the circus. - Phantom offers exist, but they’re not typically used in situations where bona fide multiples are anticipated as they serve no useful purpose. Just beware of the situations where they might appear.
- There will always be someone who has more money than you do and can out-bid you at the table. Always.
- You will never know someone else’s true motivation. And what you don’t know is always a detriment in any business negotiation.
- If you decide to compete, especially in hot Toronto neighbourhoods, your offer will be a firm offer (otherwise you’re sure to be sent home early). Be sure your financing is in place for the astronomical price you offer, and that you have an idea of what work, if any, the
money pitproperty requires. And don’t forget that insurers might require certain work to be done prior to or just after closing in order for a home insurance policy to be written. Do You Have The Money? - Life isn’t fair. I suspect that all buyers and many, if not most, real estate agents would be delighted to see a halt to the underpriced listing strategy. But can you really envision a market where sellers give up their right to determine the list price of their properties? Me neither! So don’t waste your valuable time waiting for this practice to disappear. Seek out properties that are actually in your price range and work the offer.
- You just might be looking in the wrong neighbourhood (read: price-wise) if you’re always on the losing end of a streak of multiple offers.
- If the price seems too good to be true, it probably is.
- Informed, educated buyers NEVER get played in the Toronto real estate market. So why not be that buyer??
Related MUST READ Posts:
Another Day, Another Dollar: Toronto Real Estate Market Endures Another Loonie Listing
Toronto buyers! You can successfully bid-to-buy in today’s challenging real estate market. Call Lauren at 416–550–6991 to find out how, or send me an email.
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I’m sorry but I don’t believe “most agents” would prefer under-pricing to end, at least not in some of the more hot real estate areas. It’s truly a pathetic practice that needs to end. I was at an open house this weekend that was under-priced by probably 60k and it was extremely saddening to see all these other couples looking at a house, making plans, dreaming of the possibilities, when many probably didn’t realize it was going to sell for $70k+ more than asking. Seeing them size up the rooms for their young families and debate on what they could do to the place was heart-breaking when you know that probably 40 of the people walking through it wouldn’t have if it had been properly priced.
So while the seller is likely going to get what they deserve from the home, and the agent is going to look like they can really sell a house and then add that “sold for over-asking” to their website, they are really toying with dozens of peoples emotions, not to mention wasting hours upon hours of potential buyers time, and money when you consider many will fork out for a certified cheque they will never use.
This unscrupulous practice needs to end and it’s the same realtors, time after time, that are doing this. A great solution: an agent only gets commission off the asking price or less.
Craig,
Thanks for your thoughtful comments. I hope most agents would prefer underpricing to end; perhaps I’m being too generous to my people.
As frustrating as it is, I don’t see this marketing strategy disappearing any time soon; it’s an effective one for many sellers and their agents for the very reasons you’ve mentioned. And sellers will always have the right to offer their properties for sale at whatever price they choose. It’s one of the fundamentals of owning real property.
That’s why I’ve spent so much time highlighting the underpriced listing issue with buyers in mind. I want buyers to be successful in this market. They need to know how this strategy works and avoid wasting their time on making offers on properties that are seemingly underpriced, yet actually out of their price range. When buyers spend their time and effort on these offers they’re providing a valuable service to sellers: the buzz that drives bids and bucks. And they shouldn’t expect any thanks from the seller for doing so. They’re also missing out on opportunities to find and bid for properties that are actually within their reach. While they’re frustrated and disappointed over being on the losing end of yet another multiple offer scenario, someone else is scooping up a great house that could have been theirs.
I’ve noticed a surge of traffic on the site related to this topic. Maybe my message is being heard?