Some Insight into Real Estate Bidding Wars of Greater Toronto Area
Sunday Feb 04th, 2018Share
Bidding wars are part of GTA Real Estate Industry for atleast last decade. We had seen bidding wars happening when interest rates were double then what they are today i.e. before 2005, when there was a so called “recession” in 2008 or during crazy first quarter of 2017, when it broke all records. Infact later in 2017, Globe and mail published an article showing multiple properties which sold over $200,000 over asking with as high as whopping 56% of asking. Naturally, that was unsustainable market, which led to a prices dip later during that year after implementation of new rules leaving our market in 2018 as more stable and reasonable for both buyers and sellers. It is not far when multiple offer situations will come back again once consumer confidence is back to normal. If you are kind of Buyer, who likes buying houses for sale which are more ready to move in condition in high demand neighbourhoods …..You bet….this is something you may have to face in Greater Toronto Area real estate market in the coming years. It is better to understand this concept for your future reference rather then repulsing the same and loosing an opportunity.
Five Most Common Reasons for Bidding Wars are as below:
1. Subject house for sale or condo for sale is priced & presented very well.
2. Market is very hot with more buyers then real estate available for similar type of houses for sale or condos for sale i.e. Demand is more then Supply.
3. Consumer confidence is very high due to continuous appreciation and momentum.
4. Seller decides to hold back on accepting offer till a certain day to generate maximum interest.
5. Lending criteria’s are about to change not favouring buyers.
According to the law, in a bidding war, the listing agent must tell all buyer agents, how many offers has been registered for the subject house for sale or condo for sale. But the listing agent is not allowed to give out the buyer names or say how much they are bidding. Most of the times buyer’s real estate agent calls the seller’s real estate agent and tell him/her that they plan to bring in a formal offer and may even call their office and register the offer. But that doesn’t guarantees anything, as prospective buyers may change their mind last minute. What this means is that the seller may get a handful of these so-called “registered offers” during the day with no guarantee that how many will be actually presenting during the scheduled offer presentation for subject house for sale or condo for sale during the offer presentation.
Most of the times Home Buyers feel that a seller shouldn’t had any right to look at multiple offers. But let me ask you a question here, if you were the Seller instead, wouldn’t you want to sell your home to the party who wanted to pay you the most for it? Houses are personal – it’s not like buying a car, where there are thousands of the similar type products out there. How much subject house for sale or condo for sale is worth to someone is dependent on their personal motivations and liking of that property.
It can even work many times to Buyer’s advantage i.e. there was not a single offer on the table or may be just 1 offer from Buyer who understands the dynamics of this process and came forward without getting scared of getting in a Bidding war. Now this Smart Buyer or Buyer’s real estate agent will not spare this Not so smart Seller or listing real estate agent, who didn’t do their homework right in listing their property, which led to this kind of situation in a hot market. This will most probably lead Sellers moral to go down and end up negotiating with Buyer or Buyers real estate agent present in person with an offer in hand. At this stage, what if you loved this subject property and decided not to bid for the same just because it was prevalent in your mind “Bidding wars often mean…..out of your control and I have to pay far over asking” where as situation may turn out to be totally different. On few occasions, I had been able to negotiate lower then asking even in a bidding war situation with 2 more offers along with mine as a Buyer’s real estate agent or was able to win it for my client even in 27 Offers without blowing it off. So there is no thumb rule of the outcome of a Bidding war. It is all dependent on the motivation of the parties involved on both sides. No one involved will know what offer price those motivations will result in, till the end of this process. So never be scared to participate. If you have hired a experienced and qualified real estate agent, his/her experience will help you take a more informed decision and help you through this process. Always keep in mind, end decision is always your as to how much you’re willing to pay for any house for sale or condo for sale.