Bidding Wars Are Back.

Picture this: 

A brand new detached home, with impeccable and truly gorgeous finishes, is listed in January for an 'overpriced' $2,450,000.  After 45 days, it doesn’t sell. There were a few offers but not at the price the Seller wanted.  Fast forward:  It’s the 2^nd week of March, the home is re-listed at $1,499,900 (much lower than its value) to attract attention and offers are called for in 7 days.  Offer Night: There are 4 offers and it sells for just over $2,000,000.

This isn’t just a story. I was one of those 4 offers and it was a very successful night for my client.  

And this is the third time, in the last month, I’ve participated in an offer night, where there were multiple offers.

In one case, my clients decided to make a bully offer, ahead of the offer date to preempt the competition. As soon as we submitted our offer, the listing agent notified all interested agents. Within 6 hours, there were 5 more offers. The shocking thing was to get 6 bully offers up front.  And this put all the Buyers in direct competition only it was now an earlier 'offer night'.

Two and three months ago, a multiple offer scenario wouldn’t have been considered. Now, with some home prices listed well below market value, overbidding has officially returned to dozens of GTA neighbourhoods ahead of our spring selling season.

Many buyers who have been sitting on the sidelines are now at the table. They’ve budgeted for the current level of interest rates and have started chasing the limited number of listings.  They’re also anticipating an interest rate cut by the time their purchase closes.

Unfortunately, though, there is still not enough available for sale which means Buyers have to compete for the most sought-after properties. Low inventory means higher purchase prices. A huge caveat though is making sure my clients do not overpay for a property when I know what it’s worth. Financial institutions are adamant with their appraisals. Diligent research and calculation are critical when advising my Buyers – especially since not much may have sold, nearby, in the past year. We have to remember that prices have dropped from the same time last year.

Could that change?  Definitely. With a rise in listings, it could dampen competition. The age-old conundrum: If there’s nothing to buy, Sellers aren’t going to list their own homes. And round and round we go.

Not all properties are drawing interest: some overpriced listings have become stale while sitting on the market. And that takes me right back to last week and my thrilled Buyer who competed, won, paid the exact current value and has a stunning new home.