Like bees to honey, when we see the word”bidding war” in a newspaper or magazine headline, we cannot resist the sweet temptation to read on, even if the article that hooks you has little with the topic of a bidding war.
Bidding wars are simply a way of life in many parts of Toronto. Or that’s what we’re lead to believe. There’s usually at least one article per week about a property that sold for WAY over asking. So, after you read enough of these, you begin to think that all houses sell for over 100K.
The truth is that bidding wars are not as prevalent as every one believes. And there are times when a home receives more than one offer and still ends up selling for under asking. In some neighbourhoods, they are the norm, in others, much less so. Many bidding wars are a result of a hold back. That is, the seller will not take any offers for a good week or so to allow potential buyers to see the property. Then offers are accepted on a certain date. The belief is that if you get enough people to the table to bid your house, they will lose their minds and go crazy with their wallets in a bidding war. And some times minds are lost. Other times, no one steps up to make an offer.
In terms of this particular moment in time, here’s what I am observing:
1. HOUSES RULE: Houses are more likely to go into bidding wars more than condos.
2. STARTER HOMES: Homes and condos in the starter home range are more competitive with new buyers.
3. STAGING WORKS: Homes that are staged and look amazing will more likely bring in more buyers.
4. THE RIGHT HOOD: Surprisingly high end Rosedale will see less bidding wars than Leslieville or Riverdale or even the Danforth Village. Neighbourhoods on the upswing or some emerging neighbhourhoods in the later stages will bring more offers in.
5. PRICED BELOW MARKET: Homes can be listed below what the seller will accept and usually below market value. This one drives me nuts. I have personally experiences sellers who have priced their home for $50,000 under what they really want for their home. They price for X and want Y. The problem is that the buying public believes when a home is listed at a certain price, the seller would accept that price or better. The truth is, you can offer the exact price of the listing, but the seller doesn’t have to take it. HOWEVER, the seller cannot continue to offer the house at that price. That’s false advertising. So, they must relist at a price they are willing to accept. I’m not the only one who feels frustrated by this practice. My collegues Mel and Brendan have expressed there frustration in this blog: click here
So, that’s Coles Notes on bidding wars in Toronto right now. And I emphasize right now. The presence of bidding wars in this city are in a constant state of flux. The market, the psychology of the buyer, the culture of real estate is always morfing into some thing new. The trick is to have an idea of what your home is worth and then construct a marketing approach to your home on how you are going to sell it. And if you’re a buyer, have an understanding of what price homes are SELLING and not what price homes are being LISTED.