Real Estate’s New Problem: Listing & Re-Listing

Just when you thought that the real estate market was at the maximum level of frustration, it’s as though Realtors found a new and improved way of pissing people off.

While the rampant under-listing of properties that led to multiple offers on every single listing was frustrating to no end for buyers, the new trend that’s resulted from changing market conditions may be bothering buyers even more.

I’ve never seen so many properties being re-listed at higher prices in my career.

Let me explain what’s going on, and how we got here…

Re-ListedImage

We’re in a really, really weird market right now.

The market has changed, but that doesn’t automatically mean that prices are down.

To be honest, I do think prices are down – a smidge.

There are still houses selling for 140% of list price every night.  But not as often as was the case in February and March.

April was a “transition month,” and I’ll blog about this next week in a separate, dedicated post.

But in any transition, people can be slow to adapt.  And right now, it’s the sellers, and the listing agents that are not just slow to adapt – they’re downright refusing to.

Listings are up in May, and whether the number of buyers is the same, or whether there are more buyers on the sidelines taking the “wait-and-see” approach, remains to be seen.

But I also think that with the hottest January/February/March on record, a lot of the would-be spring buyers, have already bought.

The result?

More listings, fewer buyers.

And this does not lend itself to the tradition of listing low, getting multiple offers, and selling for insane list-to-sale ratios.

Over the last decade, it’s been easy to take a $1,000,000 house, list it for $799,900, get six offers, and sell for $1,000,000 or more.

But this “transition” in April has led to a significant change, not in terms of price, but rather in terms of process in the month of May.

I started to notice this in the last week of April, when a few houses that would have, could have, should have sold, did not.

These houses were subsequently re-listed at higher prices, the day after the scheduled “offer night.”

I had a listing on the east side around that time, and we got lucky – with a bully offer for $200,000 over our list price.  But all the houses around us?  It was Re-List City, and we were living in the heart of it.

In fact, as we approach the end of May, what I’m seeing is absolutely shocking.

I would estimate that 1/3 of all houses, priced between $700 – $1.2M, are being re-listed at higher prices, after their failed “offer nights.”

And it’s making the market even more manic than it was when we had under-listing, offer nights, and multiple offers.

Who would have thought – as bad as things were, it could actually get worse.

So what’s going on out there?

I’ll give you an example.

A seller has a house that is worth around $1,000,000.  In January, February, or March, the seller would list low – perhaps $799,900, hold back offers, and schedule an offer night.

On offer night, because there was so little on the market, and so many more buyers, that listing would pull, say, 8-10 offers.

And the house would sell for $1,050,000, which is more than the seller thought it was “worth.”

This is the way things have been for the better part of my 13 years in the business, and up until now, the market has been so efficient, that a seller and a listing agent don’t need to figure out what the property is worth, and risk under-pricing and leaving money on the table.  Instead, they’d list well, well below anything resembling market value, hold an auction, and let the buyers figure out what the property was worth.

So what’s happening now?

With less activity among the buyers, we’re not seeing 4-5, or 8-10 offers on “offer night.”

And the owner of the $1,000,000 house, that’s listed at $799,900, is either getting 1-2 offers, the highest of which is $860,000, or getting zero offers, because buyers want to see if the house comes back onto the market the next day for a higher price, and if so, how much.

Face it – no seller of a house “worth” $1,000,000, listed at $799,900, is going to sell to the one person who shows up at the bargaining table, with a offer of $799,900.  Hate the game, hate the players, call it unfair and unethical – I won’t disagree.

But you wouldn’t sell if you were in that position; nobody would.

Now ask, “So what then, David, why are these people under-listing?  Why are they free to play these games?”

And I would answer, are these “games” any different than the ones sellers have been playing for the last 15 years?

And to the first question, why are they under-listing?

That’s the real conundrum.  And I think the reason is threefold:

1) Fear
2) Inability to change
3) Lack of experience

The sellers are afraid of leaving money on the table.  What if they listed their $1,000,000 home for (gasp!), $1,000,000, and somebody showed up the first day with an offer for the list price?  The seller would feel like he or she could have, would have, or should have got more.  With an “offer date,” they have that opportunity, even if it’s not working in May of 2017, they’re going to try it.

The sellers and the listing agents are both unwilling, and unable to adapt to a changing market, where listing at fair market value, instead of playing games, is more likely to get your house sold.

And the listing agents, who for years have had no idea how to price a house, but have simply been holding an auction with a “starting bid” of 20% under fair market value, still don’t know how to price houses, so they feel the “list-low, hold-back” strategy is the best way to go.

And all the while, the buyer pool is sitting back and trying to make sense of this.

So too are a host of buyer agents, myself included.

Now I mentioned off the top that properties are being re-listed “at a higher price” the day after offer night.

But what about the ones that are waiting?

Here are two stories that will add more fuel to the fire…

A particular house on the east side, that looked like it might compete with my listing a few weeks back, had offers on May 2nd.  And on May 3rd, the listing still said “Offers Reviewed on Tuesday, May 2nd, at 7:00pm.”

On May 4th, the listing read the same.

And on May 5th.

And on May 6th.

And buyers kept wondering, “Are they really listed for sale for $874,900?  Or are they going to re-list higher?”

Buyer-agents called the listing brokerage, and nobody could tell them what was what.

The listing agents spoke in generalities, and euphemisms.  “We’re open for business,” one of them told me.  “We’re evaluating all their options,” she added.  And then the classic fail-safe: blame the client.  “We’re going to do whatever our seller-clients feel is in their best interest.”

And on this went.

May 7th, May 8th, May 9th – the listing still read, “Offers Reviewed on Tuesday, May 2nd, at 7:00pm.”

And on May 11th, that listing was terminated.

But how many buyers wasted their time going to see the house, listed at $874,900, when all the while, the seller probably had no intention of accepting that price?

If you like that story, then let me double down.  And I should add, by “like,” I actually mean hate.

There was another east-side listing a couple of weeks ago, listed at $849,900, that passed its offer date, and didn’t sell, only this listing was updated and the “Offers Reviewed On….” part was removed.

I called this agent and asked point-blank, “Is the property available for sale?”  He said, “Yes.”

I asked him, “What’s going on with it?  I mean, a lot of agents are re-listing at higher prices, and I want to get a sense of where you stand.”

He said, “We like where we are, go have a look.”

And so we did, my clients and I, and we loved the house!

Who wouldn’t?  This house had to be worth $950,000 – $1,000,000, and dare I say in February, it would have received six offers and sold for over $1M.

So we made an offer, and by the time our offer was submitted, eight days had passed since the listing was updated to remove the verbiage about the “offer date.”

The agent, who was no slouch – he’s done 43 transactions in the past 12 months (I have a program that can look up any agent), albeit 42 of them outside the city of Toronto, didn’t get back to me regarding our offer for almost 24 hours.  When he did call me back, he complained that the offer went to his junkmail, and that I only gave him a 24-hour irrevocable (which is actually an eternity in Toronto).

I didn’t hear from him after that.

A day later, I called him, and he said, “I’ll meet the sellers tonight.  This noon-irrevocable garbage, what is this?  Like my clients don’t have jobs?  You should give people till midnight so an agent can meet his clients for dinner!”

Weird.  I guess he’s never heard of email.  Or the phone.  Or DocuSign.  Or the year 2017…

In any event, I didn’t hear back from this agent, which was utterly bizarre.

The next day, the listing was increased in price to $999,999.

And I never got a call back from that agent.

It was a strange way of doing business, and dealing with colleagues, but that part of the story is just for kicks.

The bigger problem here was that this property was listed for sale for $849,900, for eight days, when all the while, the sellers were going to increase the price.

And even though I brought the listing agent an offer, knowing full well, with paperwork-signed (probably in-person, at the Swiss Chalet in Bolton), that they would be re-listing for $150,000 more, the agent never though it prudent to tell me this.

Just absolutely, positively, bizarre.

Every day out there, we’re seeing houses re-listed for more than the price at which they were previously under-listed, which in itself, makes little sense.

The problem as I see it, is that sellers don’t want to show their hand.  They don’t want to show the buyer pool what they’re expecting, and what price they want, for fear that there’s a buyer out there that would have paid more.

And the bigger problem, in my personal opinion, is that at some point, “false advertising” guidelines simply must apply.

When sellers list their $1,000,000 property for $799,900, with an “offer date,” they’re effectively saying, “This is an auction, $799,900 is my starting bid price, see you on offer night.”  Most of us have come to accept this.

But when sellers are leaving the listings up on MLS at $799,900, for days or even weeks, allowing buyer agents and buyers alike to view the home under false pretenses, with a plan to increase the asking price, then how is this not false advertising?

The listing-and-re-listing is out of hand.

And while I accept a “transition period” is necessary for 4-6 weeks, if this continues through May and into June, then the whole thing is a farce.

I’m going to spend some time on the long weekend going over listings in April/May, and trying to get some actual quantifiable data about re-listing.

Yes, that is how I’m going to spend my long weekend.

I’d use a smiley-emoji here, but those don’t work on my blog for some reason.

In any event, have a safe and happy long weekend, and I’ll be back with a new post on Tuesday!

32 Comments

Post A Comment

Your email address will not be published. Required fields are marked *

  1. Parveen Sharma says:

    Real Estate agents and brokers are greedy and do unethical things. The seller should not be allowed to counter offer higher than the list price.

  2. Kristian says:

    We find your blog very interesting. The question is what will happen in the property market during the rest of this year. For now the Spanish real estate market is showing very positive signs and sales are up 20 percent from last year! We represent houses and apartments for sale and rent in Albir and Altea Costa Blanca Spain. If you visit Albir please come to see us or visit our web site http://www.albirproperty.com Best regards from sunny Albir in Spain!

  3. steve says:

    Such a sudden jump in new listings suggest people want to cash out and fear they will miss the top. I also suspect many condo investors are spooked by rent controls. Ouch! We may be in for price reductions next.

  4. Condodweller says:

    Based on what I have been reading about the market my takeaway is that there are two things influencing the recent price/demand action 1. Higher inventory 2. lower demand. #1 I believe is due to investors cashing out thinking we are near the top of the market and #2 is due to the effect of FHP.

    My educated guess is that either we are #1 topping out or we are #2 experiencing a similar short-term pull back as Vancouver did after their foreign tax/vacancy tax was introduced.

    The consensus for a market pull-back in recent discussions has been higher rates or large job losses. I agree with this, however, I have said that a third factor is unaffordability of down payments as prices escalate. It’s more likely #2 but not knowing when the funds of the bank of mom and dad run out it could be #1.

    Staying on topic I think it’s during these times that good agents can earn their keep i.e. provide more benefit than their commission. The people I have mentioned a few times now who just changed homes had sold their house in early May shortly after FHP was revealed which triggered the slowdown. This agent said the market is changing and he did not hold an offer night as he did not want to risk what several people below described happen i.e. crickets during offer night. The house was priced very aggressively IMHO (not knowing about that 20% bump in March/April) well above a recent sale on the same street of a much nicer and bigger house i.e. no under pricing. I thought the price was too high and they would never get it. They got an offer lower than asking. Fortunately, though, two more offers came in which pushed the price way higher than I would have expected and higher than a couple of other similar houses sold days before in the neighbourhood with much nicer finishes. I have a feeling they managed to get top dollar for their house (I think they netted about 10k extra after commission) in large part due to the perfect strategy of the agent.

  5. Tony says:

    Mortgage fraud has been exposed and speculators are trying to exit. This will be a hard landing crash. Game over

    1. Long Time Realtor says:

      Hey @ Tony…drool much?

    2. Joe says:

      You wish.

  6. Appraiser says:

    TREB mid-month stats for May are out and they indicate that sales are down 16% year over year. Average selling prices however are still up 17.3% over the same period. The good news for buyers is that new listings are higher by 46.9%.

    Hopefully, prices will begin to moderate to a more reasonable level. As usual the “sky-is-falling” types and perma-bears are drooling over the prospects of a real estate crash.

  7. steve says:

    I would suggest the market is turning …. David is right, the transition to a buyer’s market has begun.

    1. Free Country says:

      I would say the market is just becoming more balanced between buyers and sellers.

  8. vancouverite says:

    Speaking from my experience in Vancouver, you guys are going through the same thing due to the die-hard speculators leaving the market and now you have true end users, or long term investors happy with 2-3% cap rates(crazy if you ask me). Anyways, sellers will have to stick to their guns because that one over anxious seller who goes for a fire sell will set the tone for the neighbourhood. You may get 100K less, and if you can hold the property, prices will slowly bounce back…well as long as rates don’t go up.

  9. JL says:

    How do you view the current situation (underbid, no offers, relist high) with the one in 2011 that you wrote about here:
    http://torontorealtyblog.com/archives/3580

    “Re-listing higher is “the real estate kiss of death.” It sends a signal to all buyers and agents that you refuse to acknowledge market value, you are playing pricing games, and maybe, just maybe, you’re insane.”

    Is it any different today because everyone is underlisting significantly lower?

  10. AT555 says:

    Market is truly changing but its not a buyer’s market for sure. Seller still has some leverage over this market but much less than Feb-March. I think good chunk of buyers have left the market (wait-n-watch buyers, speculators and foreign buyers) and ones that are left are trying to be more savvy in in their purchase decision. What I have noticed that in Feb-March anything and everything (incl junk) was selling like there is no tomorrow. This has stopped now. I still see good properties with good locations are selling well and over asking but something that is average or below is taking its time. And this is how it should be. A 1-bed 450sqft with no view is not going sell over what it is truly worth anymore.

    1. Iw says:

      100% agree. The garbage that was selling in Feb/mar was unexplainable

    2. Condodweller says:

      I agree with this as well. I think the problem is that sellers panicked and started selling for the low offers where if they held out longer they might have gotten their price still. This is understandable if they had to sell due to having bought another house already. I predict one more change of habit due to recent action which a change from buying first and selling after to selling first and buying after.

  11. Ed says:

    When I interviewed agents (David included) at the end of February for the sale of my house they strategy without question was to offer low, go to multiple offers, and hopefully we would get what comparables were getting.
    The house was listed end of April and offer night was the start of May. Offers did come in but at a good 100-150k less than what the comps were.
    So we relisted at a higher price and were getting no real action so no the price is at the level of what we would have gotten on offer night.
    Who knew that the market would turn as quickly as it did. Was I greedy for not taking the high offer on offer night? Or were my expectations skewed for the irrational sale prices in February and March?
    What I do know is that a year comps were getting 800K, so even if I get out at 950K now I really can’t complain.

    1. Alexander says:

      I sold my investment Aurora townhouse in April way below Feb-Mar rates and do not regret it. The highest on our street was 950K with heated bathroom floors, redone kitchen and bathrooms, new aircon and furnace, new gazebo, etc, etc. Sellers certainly spend $$$ on it. Same layout as ours. Another one on the street next to ours -if I remember correctly – corner – “like semi” went for 880k.
      Nobody showed on our offer night. A week later – ” market price ” low baller with 715 K. Basically, I was ready to rent it out again after spending about 10 K in updrades and staging. We sold it for 858 K 20 days later. At the beginning of the year I estimated it at 750K – my own estimates based on market numbers, so I can not complain. It would be impossible to sell it over 900K after those few crazy weeks in Feb and March and whoever paid 950 K for the similar one is regretting it already.

    2. Free Country says:

      Health warning : the plural of anecdote is not data.
      Having said that, not all agents follow this approach. I spoke with my real estate agent last year about a possible listing, and her advice was simply to set the asking price at what she/I believe is a fair market price at the time, and one that I would be willing to accept on the offer night. Simple.

    3. Condodweller says:

      There is no way to know when the market turns. The same as financial markets nobody rings the bell at the very top or very bottom. People who get the very top price or the ones who buy at the rock bottom are just plain lucky. When I bought my first place back in the 90’s I got it at rock bottom prices which was pure luck and me seizing the opportunity. I had a friend who had his real estate license come with me and he said he wouldn’t buy it. Fortunately, I disagreed and went ahead with the purchase. The people I wrote about above I think managed to get top dollar for their place, however, it was not planned and in fact, it turned out to be quite the nail biter in the end with a fortunate result.

  12. FrankyB says:

    I’ve always hated the term ‘seller’s market’, but setting aside the price dynamic driving this phenomenon, what we appear to be seeing is a shift from the sellers’ negotiating leverage being so lopsided that their agents were able to conduct completely lopsided options, including being able to conduct all the shots, prevent conditional offers, being completely opaque, to one where, despite more buyer demand than typical supply, they can’t get away with these tactics anymore, and don’t know how to deal with it.

    Most people only sell their house a handful of times or less and so aren’t particularly well equipped to push back on agents with dodgy practices. At some point, these properties get tainted (or will be if the market rebalances a bit more), or sellers leave money on the table. They’ll just never know how much.

    I’m not a fan of government meddling, so I’d just prefer a more open market, but if we were to devise a rule to deal with this, you could force any listing on MLS to be relisted for a few days at a more indicative price if the selling price ended up being more than 10% of the original price. It’s hard to imagine how this would negatively impact sellers, and would probably force some more transparency in the market.

  13. GinaTO says:

    Doesn’t it all boil down to expectations, which tend to remain the same (in this case, high), even when reality becomes a moving target? Can we say that a house is “worth” $1M if buyers are not willing to pay that? My neighbourhood, the Junction Triangle, has been hot hot hot for the past two-three years. Heck, a house that is definitely not “worth” $1.2M sold for exactly that a couple of months ago (140% of list price). But now another (pretty nice) house that was listed at $899, and would have gotten over $1M two months ago, saw its offer date come and go and is now relisted at $1.2M. As JC commented, “They wanted what their neighbours got, and it wasn’t happening”. Of course, as a homeowner and seller, you want to sell for the highest price, but I find it presumptuous to assume that you “have” to get at least, let’s say, $1M. It’s only a consequence of the market being crazy high in the last few years, but it’s not like a high selling price is your God-given right. Let’s face it, if you paid $500K for the house 7 years ago, and you sell at $900K, it’s still a nice little profit.

  14. Francesca says:

    I have def noticed that something has changed in the market since the last week of April and the first week of May. Literally no house in my area at any price point has sold while before many houses wouldn’t even make it to offer night and would sell mostly at or over asking. Three houses have already re listed at a higher price and one has terminated its listing twice at two different price points. Either buyers are getting cold feet and think that the market will come down and are afraid they are buying at the top of the market or it’s the increase in listings that is making them less eager to come to the table on offer night. In my parents’ area too they have witnessed two houses on their street under list, have offer night come and go and now both properties are listed at higher prices for what the sellers were probably hoping to get. Let’s see if they actually sell for that price now and how long it takes!

  15. Ralph Cramdown says:

    Hi David, please don’t take this the wrong way.

    I don’t work in real estate, never have, I only know from what I’ve read in books and on the intertubes.

    If an agent who averages a deal a week succeeds in getting your client to see his listing and submit an offer and then doesn’t counter or return your calls, I think — going out on a limb here — that your client’s offer was too low to accept, and so low that it didn’t merit a counteroffer. You think he manages a deal a week with a crappy spam filter? I don’t. It is certainly possible that you and your client have a better sense of where the market is than his client does, but fifty deals a year is a successful agent anywhere, even in Bolton, and it is unlikely that he is successful yet incompetent.

    1. JC says:

      This happened to us on the buyer-side for a couple of weeks. Sellers would get numerous offers on offer night, but all lower (sometimes up to $150 lower), and would reject all offers, eventually going back to market at the higher price, only to take less money. I saw one case where Seller had to take $100K less that what they wanted. It was utterly frustrating,

      We eventually nabbed something, but had to convince Sellers that re-listing was a bad idea for them and they eventually sold, but it was a slog. They wanted what their neighbours got, and it wasn’t happening.

    2. Mike says:

      David, you called this guy out on the number of deals he does. Care to share your “kill count?”

      80?

      100??

    3. Alexa says:

      The point though was that he called the agent and asked if they are re-listing and he said they felt comfortable, so how could their offer have been too low, assuming it was in and around that list price? Ignoring is outright wrong and unprofessional. He could have called back with a counteroffer at 999,999 or said his clients are not signing back. Why would someone come in with a bid much over ask if it has been on the market for 8 days? Sellers have gotten too greedy – take a nice healthy profit from the last two years’ insane increase and call it a day.

      1. ak says:

        I don’t know if I’d call it greed. Trying to set the price on heterogeneous assets like houses is hard, so these guys just want what their neighbour got for their house, because that’s the closest comp. Which I understand. And now it’s perhaps difficult for them to accept that suddenly the market will pay 100k less for their house (and don’t forget, everyone thinks their house is at least 10% better than that other house in whereever that sold for 20% more, so it’s not 100k less in their minds, its more like 300k less).

        And for the record, buyers (like me!) feel the same way. I want the same house for the same money as my bud bought in 2015. But I can maybe get 33% less. Sad times.

        That’s just how life is in this crazy market.

        1. Alexa says:

          That’s the problem. The sale price of 1 property on your street is not your only comp and now the value of your house. To do a proper comp analysis, take 5-6 properties in your area, then figure it out with proper adjustments. It’s not that hard. Appraisers do it all the time. That’s what agents are for and presumably what they get paid for….. and why they keep sale prices so secretive (hopeful for the day we get more sales information like in the US).

          1. Real estate millennial says:

            To become an appraiser takes an undergrad degree and 6-11 courses from UBC depending on your degree and 1-2 years as a mentee depending on the property type (residential or commercial).

            You literally don’t have to graduate high school to be a realtor and it’s 5 redundant courses from orea.

            My point is most residential realtors don’t know how to complete adjustments properly and they’re not experts in value. A good realtor is a good marketer that’s what you’re paying them for. Is it worth the price in commission? that’s up to you.

      2. Ralph Cramdown says:

        All I’m saying is that you don’t get to be a successful agent by ignoring offers you can work with, wildly overpricing your listings, or having a spam folder that eats your homework.While other explanations are possible, I think the most likely is that the agent thought David’s client’s offer was a joke. Offering around $850 on a house that the seller and his agent figures is worth closer to a million probably isn’t going to get you a deal, even if the place has been on the market for eight whole days, and sometimes it doesn’t even get you a return phone call.

        It would be interesting to know what the place eventually sells for, and after how long.

        1. Condodweller says:

          I agree with this with one caveat. As a buyer, the best negotiation tactic is that you have to be willing to walk away or lose the deal to get the lowest price. In a changing market like this, I would definitely try a low ball offer because you never know when the seller will panic and sell it to you. Fear is a funny thing and if that seller has already bought a house for top dollar and sees lower offers, he/she just might accept the low offer fearing that prices are going down and they may not even get that if they hold out.

          1. Ralph Cramdown says:

            Oh I agree. It’s just that if you are going to make low offers, you will probably have to kiss a lot of frogs to find your prince. No falling in love with the property, and your agent will have to be prepared to take some abuse from seller agents, on behalf or their clients, or just gratuitously. Or to just get ignored. No problem. Twenty minutes after your irrevocable expires, you check the fax machine (and maybe your spam folder?) and send out the next offer to the next seller.

            The Toronto market has been so strong for so long that there is a whole generation of agents and property owners who have never spent any of their adult lives in a weak, slow market (maybe a few weeks in 2009…). And, human foibles being what they are, even some of the older ones have forgotten. Anecdotes abound. Some weeks ago, I read about how the crews who install agents’ lawn signs were running a few days behind because of the torrent of new listings. Yesterday, I read about an agent who, because all the furniture staging rental outfits are cleaned out of stock, took it upon herself to buy a truckload of furniture so she could service her clients. Maybe this is a quick blip, but…

TWEETS