Have you been reading Toronto Realty Blog for a week? A month? A year?
Choose any of the above, and surely you’ll have heard me talk about misleading headlines in the media, and how much that bothers me.
More often than not, it’s a headline like, “Real Estate Market Nosedives In May,” which leads the reader to assume that prices are down, when in fact it’s sales that have declined, and all the while prices are up.
But what conclusion would you draw from this headline?
“Frustrated By Bidding Wars? Home Buyers May See Some Changes Ahead”
An optimistic reader might assume that “bidding wars” are coming to an end, some way, somehow.
But it’s not the bidding war itself that the article is referencing in terms of “change,” but rather the process of bidding, and that’s the issue I take with this headline.
I understand that to get people to buy a paper, or click on an article, the headline has to entice. I’d be lying if I didn’t admit I’ve been lured in by those sponsored ads on the sidebar of websites that look like articles, with headlines like, “These NFL stars’ wives are turning heads.”
But when it comes to real estate, which is my occupation and passion, it bothers me more than anything else. I’m sure the same would be true of whatever industry you happen to be in, and how headlines could be misconstrued.
Over the past couple of weeks, I have seen multiple headlines about “bidding wars” all of which don’t accurately reflect what’s actually happening in real estate circles. The above headline is a great example.
But even the articles themselves, or the sub-headings often don’t explain the issues at hand.
This article, “Ontario May Let Realtors Tell Homebuyers The Price Of Other Bids,” offers the sub-title, “right now, buyers often blindly offer more than what they had wanted to spend in hopes of beating their competitor.”
Well no kidding.
I wanted the house for free, but alas, what I wanted was not in line with fair market value.
Sarcasm aside, the true issue I have with that sub-title is that it seems to alleviate the buyer of all responsibility. It surmises that it’s somehow not the buyer’s fault, or that the buyer wasn’t in control of their actions, which isn’t the case.
It can’t be the case.
You can’t walk into Shopper’s Drug Mart to buy Tylenol, walk out with two magazines, Q-Tips, some Hallmark cards, and eight bottles of Pert Plus that were on sale, and then turn around and blame Shoppers from forcing you to spend so much.
So on the one hand, you have a headline suggesting that somehow bidding wars might be coming to an end, and on the other hand, you have a headline suggesting that it’s the fault of the system in place for buyers over-spending.
I don’t like either suggestion.
Here’s a headline that is more accurate:
“Ontario To Consider Allowing Disclosure Of Prices In Real Estate Bidding Wars”
Only now, I take issue with the term “bidding war,” because once again, it’s misleading.
What is a bidding war, after all?
Frustrated buyers have a completely different definition than most, and depending on whether you’re a buyer, seller, agent, or onlooker, you would define the term differently.
Let’s not confuse “a multiple offers situation” with a “bidding war.”
Because the moment we start referring to three offers on a $799,900, 3-bed, 2-bath semi-detached house on the east side as a “bidding war,” then we’re overreacting, and fear-mongering.
For as long as I have been writing this blog, and as long as I have been working in the real estate industry, there have been multiple offers on properties. Houses, condos, low-end, high-end, it doesn’t matter; every segment of the market is prone to having more buyers than sellers.
This is a fundamental principle in almost everything we discuss here on TRB, and it often goes without saying.
The media headlines seem to suggest that if there are five offers on a house, which is under-priced to begin with, that this is a “bidding war.”
I could not possibly disagree more.
A bidding war, in my opinion, occurs when two or more parties submit multiple bids, for the same property, at the behest of the seller.
For example, that $799,900 listing gets five offers, and the people who bid $1,005,000, $995,000, and $975,000 are all invited to “improve their offers.” And they do.
But then after that improvement, the seller’s agent says, “You’re all still soooo close, why don’t you improve again?” And they do.
And then after that, one of the buyers decides to improve even more, by his own accord, and the listing agent has a legal obligation to inform the other two bidders, so he does. And they may or may not improve again, but if they do, then the first bidder can improve yet again, and then the other bidders might want to as well, and then we’re into “bidding war” territory.
But if those three bidders simply improved their offers after the first submission, and then highest bid was chosen, that’s called “Tuesday” in my books. It’s nothing special. It’s ordinary, routine, expected, and the norm in the Toronto real estate market.
I can’t help but feel as though people like to use the term “bidding war” as a blanket statement to refer to essentially any offer process, and that’s such an incredible overreaction. If you encounter traffic on the highway tonight, you can’t go around saying, “All highways are trafficked, all the time.”
I have seen buyers who live in fear of multiple offers, and in many markets, they don’t end up buying. That’s tough in a market that’s appreciated every year for twenty-one straight years…
Now as for what’s really happening behind the scenes in this world of reports about “bidding war changes,” the last headline gave you an idea, but here’s the best article, and most accurate headline thus far:
“Ontario Looks To Level The Playing Field Between Home Buyers And Sellers”
This was published on Monday by Shane Dingman from the Globe & Mail, who is probably one of the most informed and accurate real estate reporters out there today. I’m not surprised to see his name accompanying this headline.
Level the playing field. That’s a good way of putting it.
Another term used with respect to potential changes is “modernization.”
Essentially, Realtors are governed by the Real Estate & Business Broker’s Act, which was written in 2002, and as OREA’s Tim Hudak has mentioned on many occasions, it’s wee bit out of date. It’s like reading George Orwell’s 1984 today, and expecting to learn something.
I’ve spoken to Tim Hudak about this on many occasions, and I recently gave him examples of my conversations with folks at RECO with respect to advertising, and how they fail to distinguish between different forms, ie. they have many of the same rules for online and print, which is like having the same instruction manual for a car and an airplane.
REBBA simply must be modernized, and I think Mr. Hudak and others are doing a good job of consulting agents to see what types of reform are needed.
When it comes to the rules associated with multiple offers, this is the area of the Act where, in my opinion, changes would be greatest felt by consumers.
The question at hand is simple: why can’t a listing agent divulge the terms and conditions of competing offers to bidders in a multiple offer process?
People refer to the bidding process as “blind,” and it is, to some extent.
On that $799,900 listing, the buyers with the three bids clustered at the top – $1,005,000, $995,000, and $975,000 clearly know something about what they should be offering, otherwise they wouldn’t be so close together. It’s called “Doing your homework,” and the person who offers $850,000 deserves to have their time wasted, as they clearly hired an agent who didn’t know what he was doing, or had no clue themselves.
The public, however, would love the process to allow for the listing agent to say, “The highest bid is $1,005,000, let me know if you want to improve your bid.”
That would be great for the bidder at $995,000, because if he was going to improve to $1,020,000, now he knows he would be over-bidding, and instead need only go to $1,006,000.
Everybody wins, right?
Well first of all, the seller doesn’t. But that’s why all of this “disclosure” would need the seller’s consent, and why I personally think no seller would consent, and why these changes mean nothing. But let’s keep the conversation going.
So what happens when the $995,000 bidder moves to $1,006,000? Does the $1,005,000 bidder go home?
No. He’s allowed to improve.
So he goes to $1,007,000.
And then the bidder at $1,006,000 goes to $1,008,000.
And so on.
And thus I ask, how is this any different in the end? How is this LESS of a “bidding war” than what the media currently refers to when discussing multiple offers?
In theory, allowing the listing agent to disclose the prices of offers (assuming this is after ALL offers are submitted, otherwise how the hell could any of this work?), would avoid the person at $995,000 from jumping to $1,050,000. But I can tell you that this rarely happens. In fact, the “over-bid” is almost always at the start of the process.
For example, that house listed at $799,900 gets five bids as per our previous example, only the top three are $1,050,000, $995,000, and $975,000. That is how the “over-bid” happens in 99% of cases, in my opinion. Those big bids are made right from the start, and thus the proposed changes to the Act wouldn’t prevent this.
Now from here, the natural conversation goes to something like, “Well why don’t we have open auctions, like they do in Australia?”
Ah, right!
We’ve all seen the video on YouTube, we’ve all read about it in the Toronto Star, and we’ve all seen online comments about how great their “system” is, and how it would allow people to bid in a transparent process that’s fair to all.
Except those bids are done in person, on the front lawn, during the middle of the day. I can’t wait until somebody suggests that this isn’t “fair.”
And many of those listings are sold before the auction begins.
And many of those listings are “withdrawn” before, during, or after the auction.
And many of those sales are not binding as they don’t meet the seller’s reserve; which leads to the property being “passed in” as the terminology goes, meaning “passed in to further negotiations.” In some auctions, 30-50% of “sales” are actually passed in.
And so on, and so on, and so on.
And what about online bids? What about phone-in bids? Who is responsible for live-streaming? And who sets the bid increments? And are we assuming all of these offers have the same deposit, closing date, and are unconditional?
The grass is always greener on the other side, especially when it’s in Australia. HERE is a 2018 blog post I wrote about Australian auctions.
So what’s my conclusion?
That we’re all screwed?
Not exactly.
I’m completely in favour of a change to allow the listing agent to divulge the terms of competing offers to buyer agents (and thus buyers), but only with the seller’s consent.
And I’ll let you in on a little secret folks: it’s already happening.
I don’t mean that John the listing agent is telling Bob the buyer agent what Cathy the buyer agent’s offer is, because John doesn’t like Cathy or because John likes Bob more than Cathy. I mean that it’s very common for a listing agent to say to a buyer agent, “Your offer is the second-highest, but the highest is conditional. Can you match the highest offer? If so, we’ll take your offer, so see if you can come up $10,000.”
I see no issue with that, and the only folks that would are those viewing real estate sales in a vacuum, and who believe that high prices are the fault of agents and their actions.
But then again, rules are rules, and if the rules say we can’t do that (which they don’t, exactly), then we can’t. And shouldn’t.
But we do.
Figure that one out…
So let’s update REBBA to reflect how agents are already doing business, but allow the seller to have the final say.
Does that “level the playing field,” or not?
Carl
at 8:25 am
” … I personally think no seller would consent, and [that’s] why these changes mean nothing. ”
That seems to make sense if you think of one auction with a single seller and multiple buyers competing against other buyers. But one transaction is not a market. Any true market includes many sellers who also compete against each other. So if most sellers insist on closed auctions, one seller can gain advantage by offering an open auction. Then other sellers have to follow, to stay competitive.
Appraiser
at 9:55 am
Open auctions are legal, available and currently utilized, so the the option already exists. I see no competitive advantage.
Carl
at 9:29 pm
My comment was in response to David’s claim that no seller will consent. Some sellers will consent because it will give them advantage over other sellers.
The seller who advertises that the bidding will be open has competitive advantage over the sellers who keep bidding closed, because buyers prefer open bidding.
Appraiser
at 6:38 am
You’ll have to unpack that last sentence for me.
How is there a competitive advantage “because buyers prefer open bidding” ?
Carl
at 7:45 am
@Appraiser If Rob and Bob offer similar products for sale and buyers prefer Rob’s terms to those of Bob then Rob will attract more buyers.
Appraiser
at 9:51 am
As long as there are multiple offers, there is the potential for a bidding war.
All sellers should be so lucky.
JG
at 8:25 am
Yes, sellers are getting multiple offers, all below asking/low-ball, or in 2015 price range, which is actually realistic.
But they are holding out for more, in the mean time paying 1% of the entire property price per year (that’s 10k on 1M home) for maintenance = property tax, utility, upkeep, insurance, etc.
Very lucky indeed.
JG
at 8:28 am
The sellers mentioned above are the lucky ones, the unlucky ones aren’t even getting these below-asking offers.
Anthony
at 12:01 pm
David, you missed this article:
https://www.thestar.com/news/gta/2019/01/31/ontario-looks-at-revamping-real-estate-rules-around-brokers.html
I would be curious to get your thoughts on the idea of making it a buyer’s “right” to view competing offers.
Jennifer
at 12:35 pm
Yes, while the process can go on and on, one person may be at their max and would not require the other person to go up to 1,020,000 and maybe they can stop at 1,010,000.
People are buying emotionally (not good). People are buying “future value”, whatever that means and NOT a way to value property today. Now that sale price, which was too high or unnecessarily high, is the new go-to (very few know how to value properties, it is not based on ONE sale on that SAME street but that’s a different topic). The other aspect is agents saying “you three are close go back” and the person that was at the top was way over the other two and even on second round, their first offer outmatched the improved offers of the other. That person basically outbid themselves. Agents are not always honest. Both of these scenarios artificially inflate the market in no time and there should be laws to protect consumers in this regard, without question.
Patty
at 3:05 am
Full disclosure should be mandatory in order to keep everyone honest. Think of the advantage the listing agent has when he/she brings in the buyer and has the potential to “double end” the sale.
TOPlanner
at 12:43 pm
Do they still sell Pert Plus?
Professional Shanker
at 1:58 pm
Doubtful – that stuff stings similar to Head and Shoulders!
Chris
at 2:15 pm
Looks like they’ve still got it at Wal-Mart!
https://www.walmart.ca/en/pert-plus/N-1020871
David Fleming
at 9:06 pm
What do you guys use for your hair?
I’ve been using Pert Plus since 1992.
There was that brief period from 2002-2004 when I used Garnier Fructis in two separate bottles of shampoo and conditioner, but as soon as my then-girlfriend and I split, it was back to shampoo and conditioner in the same bottle. I thank God every day for the twenty-six seconds I save as a result…
Graham
at 10:13 am
David, you’re a grown-ass man, use separate bottles of shampoo and conditioner.
I use Ryo – Hambitmo: http://www.apgroup.com/int/en/brands/ryo.html
Fermented Camellia oil, bruv.
Derek
at 1:02 pm
Great post on this complex issue. I think one word should define the process for the most significant purchase most people will make: Transparency. The argument that “how is this any different in the end?” may be accurate, but it should not justify the lack of Transparency. Transparency should be the rule and let the actual outcomes/results/effects develop in the world of transparency. As an aside, I do not understand what privacy rights a seller has in a purchaser’s offer price. Any privacy interest in a purchaser’s offer sheet is the purchaser’s, no?
Chris
at 1:49 pm
Completely agree. In my opinion, this isn’t about what would lead to a higher/lower price, or pointing to Australia to support/detract from open auctions.
The purpose should be less opacity in the process. It breeds mistrust and resentment. Just look at how unfavourably the public perceives real estate agents as evidence of this.
Whatever the end result, greater transparency when people are making a significant financial decision, like buying/selling a home, should be welcomed.
jennifer
at 9:57 am
Very well summarized, both of you.
Joel
at 1:29 pm
When the discussion of revealing the prices came up I always assumed that it was meant to be after the firm sale. If there were 7 offers, then 3 re-submitted higher the winner would get to see the other offers.
This way the buyer could see the other offers and see if the listing agent was lying to them about the amounts and the other offers.
The way you explained it would just go to an open auction, which doesn’t make any sense.
Have all of the offers disclosed to anyone that submitted a formal offer through their agent. I think the concern of the public is that they don’t trust the listing agents and what they are saying.
M
at 2:26 pm
I’m pretty sure that is already the case, that a broker can request to view all offers on a listing.
Appraiser
at 3:47 pm
Teranet data released today.
Toronto prices up 3.6% year over year. Roughly in line with TREB data as recently published.
https://mail.yahoo.com/d/folders/1/messages/39919?.partner=rogers-acs&.rand=fb6c0akjoh582
Condodweller
at 7:25 pm
I agree with transparency plus I have two issues with the current bidding process.
At the very least the seller should have access to all the offers to protect him/her from a bad agent accepting a low offer in order to double-end a deal.
I find it extremely deceiving on a selling agent’s part when he/she sends the top bidders back to improve their offers. If my offer is 20k over the next bid and I am sent back to improve in the belief that I am behind should not be allowed. I know people always want the most money for their property but I would not want it this way. If I am getting equal to or higher market price for a property and some of the offerers end up competing that’s great. But to extract more money from the highest bidder is dealing in bad faith. I would not want my agent to do this.
Appraiser
at 6:52 am
Any agent or seller that sends back an offer that is $20k better than the next best, is taking a risk that the buyer will simply walk away. No buyer is compelled to remain in the bidding.
Not smart.
Like most bears, just another empty theory based on a clear lack of real world experience.
Jennifer
at 10:07 am
That usually doesn’t happen. They can hold firm, but walking away is not likely.
Also clearly lacking real world experience.
Appraiser
at 3:13 pm
Nonsense response. Who can hold firm? Walking away not likely – says who?
How many multiple offers have you been involved in? Or real estate transactions, for that matter??
Amateur.
Derek
at 3:59 pm
Appraiser, since you’re always bringing it up, can you please confirm your credentials and experience for those interested in reading your thoughts on the issues, or more accurately in recent days, your deriding of other people’s thoughts. I confirm that I have neither experience, nor credentials, just a weird interest…
Chris
at 4:27 pm
Seconded.
If one wishes to call others amateurs, question their experience, deride their education, etc., it only seems reasonable that they would provide their credentials, to prove that they are comparatively more robust.
Please share, Appraiser.
Appraiser
at 6:29 pm
Here’s a quick CV:
33 total years as a registered real estate salesperson / broker
15 years as a former salesperson (#1 agent at 35 person C21 franchise), then office manager at a Re/Max franchise, then Broker / Owner of my own Re/Max franchise for 10 of those years.
Last 15 years as an appraiser with AIC. Still a registered broker with RECO.
Let’s see your resume.
Chris
at 6:45 pm
Care to substantiate your CV?
I can just as easily claim 50 years experience in real estate. Or that I’m Frank Leo. Or maybe John Pasalis, I like him…I mean me.
Appraiser
at 7:02 pm
Lets see your resume @Chris.
Quit dodging.
Amateur.
Chris
at 7:10 pm
1. I never called anyone an amateur or questioned their experience. I argue on the merits of what people say here, without reference to their education, career, etc. And as you and a few others here don’t seem entirely stable, I won’t be sharing details about myself.
2. I already told you. 50 years real estate experience as John Pasalis/Frank Leo.
Without proof, claims are useless.
Jennifer
at 10:05 am
That’s true, however, if I was the person that was 20K behind, I would like to be told that I need to come up with at least 20K to get it, and then also let the highest bidder know what is happening. I know this has happened to me, an agent said look you need to come up over $60K and that was the end of it for me. I appreciated that. But other times you find out you were within arm’s reach and you didn’t know, and that’s frustrating. This would be resolved with more transparency .
Appraiser
at 8:06 pm
Still dodging.
So. Weak.
Chris
at 8:31 pm
Whoops, did you hit the wrong reply button there?
Still no proof. Could very well be the amateur you accuse everyone else of being.
Exceedingly. Weak.
Real John Pasalis (also known as Mxyzptlk)
at 10:19 pm
@Chris
Please stop pretending to be John Pasalis. I am, in fact, the Real John Pasalis. See my handle? What more proof do you need?
Derek
at 11:21 pm
You’ve been around a lot of years, Appraiser. I suppose it’s no wonder your recent posts are akin to yelling, “get off my lawn!”.
Appraiser
at 7:49 am
Another empty theory devoid of substance. Now, get off my lawn!
John
at 7:58 am
This is the exact scenario that I’m concerned about and has heard of happening – top bidder sent back to improve her offer when the other bidder’s improved offer wasn’t even higher than hers.
But now that I think about this, how does it happen? The usual offer process is documented and both selling and buying parties cross out, write in their revised offering conditions and send back to signal that they have rejected the current offer and these are the new conditions that they want or are willing to offer.
The scenario of the selling agent simply sending all the buyers back to improve their offers sounds kind of risky unless the revised bid is at least close to the top bid, or there are so many bidders that she can simply ask the revised ones to continue to improve their offers as they are still behind.
The story that I have heard was simply a two buyer situation, and the top bidder was told to revise her bid. It sounds to me like it’s simply a case either the revised lower bid got close to the top bid, or the usual documented offering process wasn’t used and the top bid was not rejected, but simply requested to make an improvement. If this is the case, it looks like the buyer agent wasn’t experienced enough to protect his client. And I’m not sure what the selling agent did was right.
Chris
at 9:49 am
Interesting article on young homeowners in Canada’s big cities:
https://www.thestar.com/news/gta/2019/02/13/young-families-scrimp-to-own-homes-in-canadas-big-cities-report.html
There are results for both the bears and the bulls and to relish.
From my perspective, this was a pretty striking statistic:
“It found that millennials and generation Xers are delaying both retirement savings and paying off credit card and student debt in order to afford homes, with 78 per cent expecting homes to match or outperform other financial investments over the next five years. In Toronto, that number rises to 83 per cent.”
Buying a home because you want to live somewhere long-term is one thing; buying a home, and foregoing paying off your credit card, because you expect real estate to outperform other investments…well, that seems like a a bit of a risky strategy.
Graham
at 10:16 am
https://www.youtube.com/watch?v=DV_PzRb1pLk
Libertarian
at 1:22 pm
Funny video by Graham in response to your comment! You guys have been commenting on this blog for a long time, so are you guys really surprised by that 83 percent number? I’m not. That’s the general sentiment that’s been talked about by commenters on this blog for as long as I can remember. It was so totally over the top that it’s the reason why I started commenting on this blog so many years ago – to try to balance it out. I agree with you that people have to separate “rent vs. own” on the one hand with “investment” on the other, but most people don’t.
So while you and others endlessly debate on this blog every survey, finding, interest rate, recession, bond yield, policy, by-law, etc., about everything real estate, none of that really matters. (Although, it is sometimes entertaining.) The level of demand in Toronto for real estate is simply people have been brainwashed that real estate is the best investment because it will go up forever. People believe that because most of them are financially illiterate and don’t know how to do math. Until that changes, demand will remain high.
Chris
at 2:04 pm
Ah, I don’t think any of us believe our debates here will have any significant impact. It makes for some interesting discussions, but some comments on a blog aren’t going to bring down or boost up the Toronto real estate market.
The 83 per cent figure is a bit surprising. I didn’t think it would be quite that high. Certainly seems like the extrapolative expectations that BoC Governor Poloz warned about are widespread.
As for public sentiment towards real estate, I’d be curious to see similar statistics in the United States circa 2006. I’d bet many there thought real estate would match or outpace other financial investments over the next five years. Fast-forward to 2011, and I’m sure that proportion had declined significantly.
Maybe things will keep chugging along up here, and demand will remain high? Or maybe sentiment will start to shift if returns fall short of the high expectations people have clearly placed on their real estate investments.
Libertarian
at 5:25 pm
I wasn’t implying that the debates and comments impact anything. I agree, they do not. I meant the statistics that are the topics of the debates do not mean anything. I think all those statistics are over-analyzing the topic to death.
I’m sure those statistics are important to the BoC,OSFI, and all the think tanks that come up with those numbers, so I understand why they exist. But in terms of their impact on the price of real estate, it’s just a bunch of noise.
Based on the slowing numbers that have come out recently, it seems that the tide is starting to turn. But as I wrote in my last comment, most people can’t do math, so they haven’t figured it out yet. Prices are higher today than they were five years ago, so people think they’re ahead and they tell everyone they know about that. Until that changes, the 83 percent will continue.
Chris
at 5:53 pm
All fair points.
Unsurprisingly, my personal bet is that the tide will turn. Since the market fell from Spring 2017 highs, the media reporting has largely been less than flattering for real estate. Even TREB’s most recent report shows a year over year price increase below the average GIC.
More of this will, eventually, dent the confidence of that 83 percent.
Libertarian
at 10:54 am
I agree – eventually, that 83 percent should decrease.
And based on previous comments you’ve made, I think we both agree that there’s nothing wrong with owning your primary residence if you plan on living in it long term. So I don’t have a problem with people buying. What boggles my mind is why investors keep buying at these levels. As you wrote, a GIC would be way easier. It will be interesting to see if people buying their primary residence keeps demand high enough to attract investors going forward.
Condodweller
at 5:35 pm
As our host has realized in the recent past it all comes down to financial literacy. I saw a video recently which essentially stated that no matter what we see/hear we should use our brains and think for our selves when making any kind of decision in the face of relentless propaganda. By propaganda, I mean popular belief.
I learned a while ago that when investing it is the entry price that determines your ultimate profit; contrary to the popular belief that it is the selling price. I believe this is also true for RE.
For those who believe this to be true, it’s worth thinking about how much profit one can make in RE based on various purchase prices in the past. Let’s say we sell an average SFH 15 years from now for $1.2 million. Note that this is an arbitrary number and I don’t wish to get into a debate on how realistic, or not, it is. The point is you pick any reasonable selling price. Now calculate your profit at various times since 1996 and today using an average SFH price for the GTA.
This should clearly highlight the point given the fact that the price increase has been straight up since 1996. What we notice is that as prices have gone up, our profit has steadily decreased.
Note that it was after the spring of 2017 when prices turned down when we started hearing about outcries from preconstruction buyers how unfair it is for the builder to sell the same home for less.
Perhaps these millennials haven’t heard of the golden rule of investing which is to buy low and sell high. If they had, perhaps they might re-evaluate their thinking considering RE prices are at record high or near record highs depending the market segment we use.
Libertarian
at 10:59 am
I agree with everything you’ve written.
Your last paragraph – it doesn’t matter to millennials that prices are at record highs. They believe that prices will be higher going forward forever. And that applies to everybody who loves real estate, not just millenials.
But as everybody on here knows, just because prices are higher next year doesn’t mean it’s a great investment. There are a lot of costs involved, which lower the rate of return.
Pete
at 9:29 am
I have to take exception to your interpretation of this as saying the buyer wasn’t responsible for their actions:
“right now, buyers often blindly offer more than what they had wanted to spend in hopes of beating their competitor.”
Saying they offered more than they had wanted to doesn’t mean they aren’t taking responsibility. It’s saying that they had hoped to spend less and what’s wrong with that? If you wanted to buy a new sofa and budgeted around $2K but loved one that was $3K and bought it, that doesn’t mean you’re blaming the store, it means you spent more than you hoped. There’s a difference.
Tony Janusky
at 5:18 pm
It should be illegal to “stage” or schedule when bids are accepted, IMHO.
This is one of the main vehicles that has caused the artificial inflation of home selling prices.
If a buyer sees a home and wants to bid on it, the agent/broker needs to take the offer to the client, regardless of what the offer is, or when it has been submitted – and must do so without bias.
Listings Victoria
at 1:12 pm
Bidding wars are coming back for affordable properties: https://www.listingsvictoria.ca/blog/bidding-wars-offer-competitions/
Noe
at 4:49 pm
Illegal corrupt market. Disgusting manipulation of decent Canadian families and exploiting them. No wonder everyone’s leaving this corrupt market full of vampires.
Janna
at 1:59 pm
Bidding wars are corrupt. They are unmitigated bribery. The sellers should list what they want for the house and stick to it and refuse to be bribed by buyers who offer extra money in order to eliminate the other potential buyers. It is unethical and our government needs to outlaw it. All buyers should be on a level playing field and deep pockets should not play a part in it at all.
Todd
at 12:32 pm
This practice of blind bids should be ILLEGAL!!!
It’s falsely driving up the prices of real estate to levels that people can no longer afford.
It’s creating a false rise in cost because the buyers are all overpaying for these properties.
Agents have created this to line their own pockets with more commission money.
It is sickening, and it is slimy!
You agents are scum that create this.
It is price gouging, for your own benefit of commission.
It should be illegal what you people are doing!
With all the “DEMAND” you agents say is happening for housing. Then why should a seller even utilize your service?
If housing is in such high demand, then why not put a sign up yourself, place it on Purple Bricks, and open up a private MLS listing ourselves? (Which is now legal for a private home owner to do)
We can do the same thing you’re doing…put our listings in MLS, and have our phones ring for showings. It’s simple and it’s easy. We don’t need you, in order to do this!
I have sold my last two homes privately and it was smooth and easy as can be.
Both parties have their own legal representatives and it’s that simple.
Houses are selling themselves these days. We don’t need slimy scumbags like you to “monetarily rape” not only the seller for the commission, but also the buyers by falsely overpaying for property!
I understand greed makes today’s political and business structures go around.
But it’s wrong. It’s scummy. It’s unethical and not moral.
You agents are scum!
Susan Lord
at 10:31 pm
Well the bids should be divulged and to hell with the sellers “consent”!!!
Mardig Bidanian
at 3:01 am
Well the real estate playing field will never be level because ever purchaser has different buying power. In the example of the three clustered bids around a million , the person bidding $850,000 will naturally lose the competition. Just because the person bids $850,000 does not mean they are incompetent or “did not do their homework” , its about buying power . Note the reason why some people are being pushed out of buying is due to a lack of purchasing power. For one , there are fiscal consequences of taking a mortgage on a house with an inflated price. Yes I know there are three methods to appraise a house or property. Sometimes a bid is not “blind” it is a “red line” just like an auction. Because taking an expensive mortgage means that you have less options , you are hunkered down. You can’t invest in the project or business you want, you need to sacrifice in other areas, you may need to stay in a job you may dislike. The economics of this obsession with homeownership in North America is another topic altogether.
Susan Mcknight
at 8:49 am
There should be a law against overbidding as this is not a fair deal to buyers as the real estate agents work only for the seller and huge profits are being made, housing prices and resale value is ridiculous making the housing market out of reach for most people. My husband and I were wanting to buy a house on the lake, a house we were looking at was listed for 899,000. Sold for 1,300,000. How fair is that? How can people afford housing prices like this? People from Toronto are bringIng their market north and driving the prices up and up. We are in an unstable economy due to the Covid situation as it is, how can the real estate board allow this? I think it should stop! As for auctions in the housing market? I can’t even imagine how crazy that would be. I also think there should be a law to protect consumers as soon no one will be able to afford to buy a house never mind keep it when interest rates rise!
Sal Richards
at 7:21 am
On that $799,900 listing, the buyers with the three bids clustered at the top – $1,005,000, $995,000, and $975,000 clearly know something about what they should be offering, otherwise they wouldn’t be so close together. It’s called “Doing your homework,” and the person who offers $850,000 deserves to have their time wasted, as they clearly hired an agent who didn’t know what he was doing, or had no clue themselves.
In the paragraph above you say the agent who puts in the offer at 850,000 is wasting time, didn’t do their homework. I would say the listing agent who listed the property at 799,900 did not do their homework by undervaluing the property, or is it a sales plot to waste other people in enticing buyers. You use shoppers example, so do I, I walk into shoppers to buy Tylenol, they place a price of $10 at the shelf. I pay $10 plus tax and walk out. Shoppers at the checkout doesn’t say, well on the shelf we labeled the bottle as $10 but really we want $25 for the bottle. This is what real estate has become, and until this game of undervaluing asking price to getting bidding wars going stops, the game will never end, unless buyers collectively pull a Game Stop stunt which occurred several month ago on the stock market.