Trends and fads may come and go.

But do they ever come back?

“Holding back on offers” was the trend when the market was hot, and then we entered a brief lull where buyers ruled the roost and sellers fought for their attention.

But the market is red hot once again, and so too is the hold-back…

I had an interesting experience last night.

A client of mine wanted to rent a condo in the neighborhood of Mount Sinai Hospital, and she brought two friends along who were also looking to rent a condo in the downtown core.

By the end of the day, both my client and her two friends had found condos that they wanted to lease, and thus we put in two offers.

We didn’t get either of them.

Brianna & John wanted to lease a unit at 37 Grosvenor, listed at $1,380 per month.  But after only ONE day on the market, there were two other offers!  We offered $1,450/month, and we still didn’t get the condo.  The landlords actually took less money because they wanted “one person living there, not two.”  Hmmm….turning down a 5% premium….I guess this landlord failed “Investing 101.”

Leanne didn’t get the condo at 21 Carlton Street because it had already been leased that afternoon!

And these are just leases; I haven’t even begun to talk about sales!

All over Toronto, buyers and lessees are racing to see new listings before anybody else does, for fear that they might miss out.

Listings are down 37% from last year, and there is a severe lack of inventory in the sub-$600,000 range for sales and in the sub-$1500 range for leases.

Make no mistake, the market did drop 10% in the GTA from the peak last year, but despite the doom and gloom of December and January, the market and its respective buyers and sellers are pretending like this never happened!

But now comes the real rub, and that is the fact that holdbacks-on-offers are coming back into play.

Remember the hold-back?

“Offers kindly reviewed on Thursday, May 21st @ 7:00PM.”

Personally, I was glad when this “nonsense” stopped, but with the market as hot as it is right now heading into June, we’re seeing a lot more of this:

Now whether or not the owner is actually out of town doesn’t really matter.  The fact remains that sellers and their agents are listing properties with “48-hour irrevocable” or an actual holdback on offers to a certain date.

Some people have professed that this is an attempt to push the market off yet another cliff.

But I’d like to play devil’s advocate and explain how this is actually helpful for both buyers and sellers under the current market conditions.

From a Buyer’s Perspective

I was speaking with a colleague today about the pros and cons of holding back on offers, and she gave me an example of why the holdback helps her clients.  A property came onto MLS today around 12:30PM, and it was just what her client was looking for.  My colleague feared that this property might sell today or tomorrow, so she knew she had to get her client in there today to see it!

Her client agreed to take an hour off work to meet her at the property at 3PM.

My colleague called in a favor from a friend to have her two-year-old daughter looked after while she showed the condo.

She then called another client to reschedule an appointment she had previously made for 6PM that night just in case the condo client wanted to make an offer and she had to meet him after work.

One condo listing threw 3-4 people’s lives into complete disarray, all because there would be a race to see which buyer gets there first.

My colleague explained to me that if the sellers were holding back offers until Monday night, then her client wouldn’t have to take time off work, and she wouldn’t have to reschedule other appointments and find somebody to look after her kid.

She would be able to go about her regular day, her client’s heart-rate could drop back below 180, and they could view the property on the weekend.

Maybe it’s naive to use the word “fair” in explaining a real estate practice, but by holding back on offers, you give every buyer their “fair” shot at viewing the property and making an informed, rational decision.

And this brings up the second problem with the race against time – how can you possibly make a rational purchase decision when you saw the property for ten minutes, have been thinking about it for an hour, and have your agent telling you that there have already been ten showings booked and that it might sell that night?

What if you want to conduct a home inspection?  When do you have time to do that?

All these problems can be solved by holding back on offers for 7-10 days and allowing buyers and their agents to avoid the frenzy that comes with trying to be the first through the door and ensuring they don’t miss out.

From a Seller’s Perspective

Cynics will automatically say, “Sure sellers want to hold back – it’s more money for them!”

But that’s not always the case, and it’s not the main reason why sellers are holding back in this market.

I will be the first to admit, and you can throw this statement back at me if you want: At the peak of the market, the “hold-back” was a technique used by listing agents to gouge buyers and manipulate their fellow buyer-agents into paying more than fair market value.

But there’s that word again – “fair.”

All is fair in love and war, and all is fair in open markets.

Nobody forced Mr. Jones to pay $751,290 for that house listed at $589,000 back in September of 2007; he did it by his own free will.

Today, sellers are as confused as ever as to the value of their homes.

In January, sellers in Toronto practically couldn’t give their houses away.  Sales were down, nobody was buying, and properties were sitting longer than that same loaf of bread at your corner store.

But in the last 6-8 weeks, the market has completely turned around.

There doesn’t seem to be enough product in the $250,000 – $600,000 range, and properties are moving fast!

Still, some houses or condos sit on the market like they did before.

But others are selling in a couple days, or even the first day the property hits the market.

No word of a lie, an agent in my office went out this afternoon to view four new properties that had been listed yesterday, and while one was sold firm with no conditions, another had two registered offers.

The fact of the matter is: we just don’t know how the market will respond to a given house or condo.

And that is exactly why sellers are starting to hold back on offers.

Maybe there are four buyers for your house, maybe there are none.

But to err on the side of caution is the best way to avoid making a mistake with your largest asset, and it lets these sellers sleep at night.

The sellers can then add some structure to their lives by knowing when they will review offers, and thus don’t have to worry about being on call, on edge, on the tip of their toes all-day, every-day until it sells.

So there you have it, from the perspective of both buyer and seller.

Holding back on offers might simplify the process in some cases, and an overwhelming majority of my colleagues have embraced it.

How long this will continue is anyone’s guess.

If we can’t predict the market movements, how can we be expected to predict the market fads and trends either?