Thread by @Smarter_RE

Insight on bidding wars in Toronto. 🧵

B4 listing a home the seller & agent discuss listing strategy.

1. List w low price, set offer date. Low price brings traffic, usually lots of it. Some serious buyers & many who “hope” they can buy at or near list price. #torontorealestate

2/ Option 2, list at or just above what u want & wait. This is usually done when mrkt is moving slower, more homes available.

The reasons sellers will choose #1.

👉🏼supply vs demand. Low supply, plenty of buyers brings lots of showings. It’s a # game. Get 50ppl in to 👀home

3/ higher chance of multiple offers & maybe selling it more than its worth.

👉🏼if everyone else is underpricing in ur neighbourhood & u price higher at true value buyers may think ur asking too much. So go w the flow. Especially when ur neighbour received 16 offers last week.

4/ 👉🏼seller has an answer in a week. Show home, get offers & know where u stand in 7-8 days. Less hassle to deal w showings & keeping home “staged” & neat.

👉🏼 Main reason. Everyone wants to win the lottery. When u see others do it, you also want to have ppl throwing 💰at you.

5/ Pricing low is looked at by many as “playing games”, or “sleazy realtor trick”. It’s a bit of both. It’s a gamble/game. What if you get no offers or low offers. Seller looks greedy & must go to plan B (if they have one) Thing is this trick has been happening in T.O. for 10+yrs

6/ Most know the game. But still buyers loose out 8,9,10 times bidding on homes. Why?

A big part is “HOPE”. Buyers hope to buy a home for less than value.

Also👉🏼

Not understanding process, not understanding true value of home b4 offering, bad advice.

7/ I could do without the bidding wars. They can be stressful on either side.

When acting as listing agent you have the pressure to bring ur sellers a great selling price while also being fair/ethical to all buyers & looking for potential issues with offers to protect ur seller.

8/ As a buyer agent you need to make sure u advise ur buyer on the value of the home so they don’t overpay. Help deal w emotional & mental stress the process takes on buyers. And negotiate pretty much in the dark since bidding wars are blind auctions in Canada.

9/ The selling agent is not allowed to share to any of the buying agents the details of any of the offers. Only info they tell buyers is how many offers they have received.

Buyers need to figure out what to offer to be competitive without outrageously overpaying.

10/ Do your homework, discuss price, send offer & wait.

Sellers review terms of each offer.

Price, Deposit, Closing Date, Conditions if any, all come into play.

Depending on selling agent/seller & amount of offers, process could take 2hrs or 6hrs. Lots of anxious waiting.

11/ Now a look behind the curtain so to speak. The truth about bidding wars.

Many of the offers received when we get multiples are not anywhere near what the home sells for.

50%-60% are not even close to value, 20%-30% are so so close & 10%-20% r offers at or just above value.

12/ On the surface it looks like a buyer is competing with 9 buyers. And although they are, the reality is more like 1-3 buyers.

Does this process inflate prices? Sometimes yes, sometimes no. I get surprised by a high price maybe 15% of the time. The rest sell at value +1%-2%.

13/ Selling agent will work with the top 10%-20% offers to get a deal done for sellers.

Having a deposit ready & in hand can give a buyer a small advantage & at very least show they are prepared. A organised agent & buyer r attractive to a seller.

14/ In a mrkt like today it’s easy to get emotional & make mistakes. Discussing process b4, during & after is a good way to help when loosing a bidding war. Helps buyer understand why they lost & easier to put behind.

Control what you can control & let the process play out.

15/ A few get lucky & win 1st try out. Others need to try a few more times to win.

Buy what you can afford, be realistic with what you can buy & plan to stay a while.

Hope is great, but in today’s Real Estate Market it won’t help. End.