BIDDING WAR….The Conclusion!

“David, is everything alright?” asked two concerned agents as I shouted “Bwwaaaah!”

“Uhhhh…..huh….” I replied as I could barely muster out any words.

Here are some words:

Shocked.

Amazed.

Dumbfounded.

As I logged on to www.torontomls.net this morning and checked the previous day’s solds, I absolutely GASPED aloud for everybody in the office to hear, as I saw what 144 Barker Avenue sold for…

barker02.jpg

$341,000.

That’s not a huge number as far as Toronto real estate is concerned.

But even I am amazed at what this house, the sellers, and the listing agent were able to achieve.

I predicted in my blog post last night that the house would fetch $315,621—a ridiculous number when you consider that the house was listed at $259,900.

But $341,000?  Is this house worth it?

If the new owners took posession in a couple of weeks, and subsequently listed the house for sale in the exact same condition and state as they purchased it in, could they get $341,000 for it?

Or was this $341,000 a result of a strategic plan of action by the listing agent; a result that could only be attained by the “formula,” which Realtors have come to realize is the only way to attract a bidding war?

Well, I think it’s safe to say that had this house been listed at $341,000, it would have sat on the market, unsold, for quite some time.

The Formula:

1. Underprice the house.  If the house is worth $290,000, don’t list it at $290,000!  List it at $259,900.  That way you’ll attract buyers who are pre-approved for $250,000, and are looking beyond their means.  Naive buyers.  Under-educated buyers.  The more dummy offers you get—and in this case a “dummy offer” is anybody dumb enough to offer $285,000 or below on this house listed at $259,900, since they have ZERO chance of purchasing it at that price—the more the eventual buyer will pay.

2. Stage the house.  I’ve mentioned the importance of staging before, but I can’t stress it enough.  An empty house results in an empty mind for the buyer.  Buyers have no imagination, plain and simple.  The “blank canvas” approach never works.  You need to take the buyer by the hand, and tell them “this is your dream home!”  The house needs to be clean, organized, and as open-concept as possible.  Remove the clutter, minimize the furniture, and show the space.  Have one couch where you previously had two.  Remove half your clothing from the cupboards to show that your clothes are there, but there is still extra space!  Simply put: make this house different from all the rest.

3. Follow the timeline.  List the house on a Tuesday.  Have the agents’ open house on the Thursday.  Have a public open house from 2:00 – 4:00PM on both Saturday & Sunday.  Receive offers at 7:00PM on the following Tuesday or Wednesday.

4. Preparation is key.  On the part of the Realtor, do your homework ahead of time.  Make sure that “Just Listed” advertisements fill up people’s mailboxes the very day that the For-Sale sign goes up on the lawn.  Prepare weeks in advance to make sure that the entire neighborhood knows this house is for sale.  Many people move houses within the same neighborhood, afterall, they like where they live.  Many people urge their friends and family to buy into their neighborhood!  If Globe & Mail and Toronto Star ads are going to be run, ensure they are run in advance of the public open house to maximize the traffic on Saturday/Sunday.

5. Open House.  I once read a statistic saying that more than 60% of all homebuyers had no intention of moving when they happened upon a house and subsequently made an offer.  Don’t assume that only active buyers are going to make an offer on the property.  Open house signs should litter every available street corner and main intersection to attract all the dog-walkers, stroller-pushing-mommies, joggers, Sunday-drivers, tire-kickers, and out-of-area families who are driving around “the big city” looking at schools and neighborhoods.  These passive prospects may be the eventual buyer of the home, and people who don’t live in the area often have no frame of reference on value, and may be the ones offering 135% of the listing price.

6. Don’t be greedy.  Being the seller in a situation where nineteen people have lined up for the opportunity to possibly purchase your house is not an easy task.  Maybe you grew up in this house, and it was handed down to you from your parents, and perhaps they paid $11,000 for it back in 1968.  You attract more flies with honey, so be happy, cheerful, optimistic, positive, and make the buyers feel like they are getting a terrific property for their money no matter what they offer.  No buyer is going to grudgingly offer $341,000 on a house listed at $259,900.  They are only going to do so if they sit down at the table across from you and see somebody who reaped the rewards of living at this house, and whose life was made better because of it.  They don’t want to see dollar signs in your eyes, just a pleasant smile and a sincere hope that you may pick up where they left off.

7. Time the market.  This house went on the market when very few similar properties were available, and thus it attracted a ton of attention.  April to June and September to October may be very busy periods in real estate, and that is when most buyers are looking, but there is often a lot of competition one week, and very little the next.  If you want the big bucks, you need to think outside the box.

I can’t help but wonder how many bottles of champagne were drank last night by the new owners of 144 Barker Street.  Good for them, I hope they can breathe a sigh of relief knowing that their search is over.

But I also hope they bought their champagne at Costco, because those monthly mortgage payments are going to start soon, and every morning when they wake up, that magical number “341” is going to resonate in their heads….

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