It’s tough being a buyer in today’s real estate market. There are few houses for sale and to make matters worse, assuming the property is well priced, you may have multiple offers and bully offers to contend with. Every day buyers and their agents have to be on alert and ready to act or someone else may snatch the property even before you get a chance to see it.
The market in April was super active resulting in 45% (34/76) of properties selling above the list price in the above areas combined. Adding salt to the wound, is that 21% (16/76) of these houses sold for $100,000 or more above the list price so a buyer today needs deep pockets to be in the game. Supply is the wild card which will determine a continued seller’s market or inject some balance going forward. In the meantime the market delivered a frenzied seller’s market in April:
The fiercest competition took place in Cedarvale with 67% of houses selling above the list price and 50% selling for $100,000 above the list price.
A close second was popular Hillcrest Village with 70% of houses selling above the list price and 40% selling for $100,000 above list.
The Annex experienced intense activity as well with 64% of houses selling above the list price and 36% selling for $100,000 above list.
In Corso Italia, an up and coming area, a whopping 78% of the houses sold above the list price. House prices in Hillcrest Village and Regal Heights are high so first time buyers are pursuing houses further west in Corso Italia driving up its prices.
With so much demand and so little supply putting upward pressure on prices, what can a buyer do to alleviate the financial burden of buying a house? Do you throw your hands up in the air and give up or do you try to take control? Is this even possible?
The good news is that it is possible more often than you think. There are mistakes buyers make which make the process of buying a house more expensive and more painful in a seller’s market brought on by buyers themselves. What are some of these mistakes or missed opportunities and what can a buyer do?
First, don’t pass up a house just because no other buyer submitted an offer on offer night and convince yourself there is something wrong with the house. Buyers do this all the time to their detriment. Maybe it’s priced at market value and not under priced to attract an onslaught of buyers. But buyers are so conditioned to compete for a house that when no other buyer wants it they think there is something wrong with the house.
How many times have you heard of a house priced at $999,000, for example, with no buyer coming forth on offer night then the property is reduced to $899,000 and it gets a multiple offer and sells for $1,050,000 just a few days later? A buyer could potentially have bought this house for $999,000 but nobody else wanted it so buyers convinced themselves that something was wrong with the house and they passed. This was a missed opportunity and it happens regularly. Don’t you think this paralysis drives up prices?
Secondly, don’t drag your feet when there is no set offer date. Considering current demand every passing day during the first week the house is on the market puts you at greater risk of competing with someone else if the house is priced to reflect market value. So act quickly. Unfortunately many buyers drag their feet only to find themselves in competition because they waited one day too long to make an offer. This also drives up prices.
Thirdly, don’t submit a low ball offer or a conditional offer when there are multiple offers on a property – just pass on the house.
For example if a house is listed for $899,000 and it has four offers registered, submitting a conditional offer or an offer below the list price simply drives up the sold price because the more offers the higher the buyer who really wants it will pay. Making matters worse is that this new sold price will set a price benchmark and you have just managed to drive up prices in an area you want to buy into.
So how can a buyer avoid these mistakes or seize these opportunities? The key is to work with an astute agent who is able to uncover these opportunities, bring them to your attention and has the credibility to nudge you to act or encourage you to stay away.
My experience has shown that if a buyer works with a strong, competent, experienced and full time working agent whom they trust, who has credibility and a track record, then they are more likely to take the agent’s advice and save money in the end. So find one of these agents to work with, because there are many, and get yourself a decent deal in this crazy seller’s market.