Each of the last two years, Cheri and I have been involved in a competitive bidding situation more than fifty times. Our clients were up against other buyers for the same house. The year before that it was just five or six times. That’s how much the real estate scene here in Kingston has changed. Low inventory and high demand has created a seller’s market. Multiple offers are now the order of the day. And it’s unusual for a good property to be listed without a date a few days down the road being set for the review of any and all offers.
We have mixed feelings about this situation. We are pleased for our seller clients but caution that the surest way to ward off multiple offers is to overprice a property. And we worry for our buyer clients who find themselves having to pay more than the data would suggest is reasonable for the property they love. And we feel for our clients who lose in these “auctions” and eventually settle for properties that aren’t necessarily their dream home.
There are other, more subtle fall-outs from this bidding fever. When clients buy less than ideal properties, they often reach out to local contractors to renovate their new homes. But these contractors are busier than ever, given these market conditions, and our sense is that wait times are longer and prices for changes and upgrades are higher. The final cost of that dream home can be a lot higher than expected.
We’ve seen forecasts that suggest that the market will be more balanced this year, with more modest price increases and presumably less competition. But that’s not what we’re seeing in these early days. It feels feverish again, with buyers anxious to find a home and sellers still sitting on the sidelines.
We received five offers for our own listing on Willingdon Ave last week. It was the first of the year and our sellers are pleased with the outcome. But then, within a couple of days, we represented a buyer client in competition. She was keen on a lovely downtown condominium. On the morning of the day that offers were to be reviewed, the listing agent told us that our client was competing against just one other party. She also told us that the seller wouldn’t allow for a presentation in-person. So I emailed my client’s offer to her, along with an explanation of who our client was, why the property was a good fit for her, and how marvelous a guardian she would be of the place. And then we waited.
About an hour after the 3 pm time set for review I got a call. My client was not the lucky winner. Fair enough, I thought. You win some, you lose some. Dragging out a cliche to deal with the disappointment. But then I was told quite casually that there had been four offers eventually for the property. Two had apparently materialized in the final few minutes before the deadline.
You might think, Well that’s too bad, and offer up a resigned shrug. It’s mad out there, you might say. You just told us exactly that, Mark, and them’s the breaks, aren’t they?
Well actually no. The law is clear on this point. A buyer has to be told how many parties she is competing against. If new offers come in, as they did here, the agent must call all parties with an update, so that all the potential buyers can amend their offer before the presentation. That’s a process that serves the best interests of the seller, and also protects all of the buyers and puts them on an equal footing. That obviously didn’t happen here and my client is not amused. Not in the slightest. Had she known how much competition she had, she would have offered more. And despite the agent’s professional, helpful behaviour in the days leading up to the presentation, I’m not happy either.
Perhaps this just sounds like so many sour grapes: My client lost and the search should begin again. But hold on a sec. This isn’t personal. My point here is that in this overheated market the process is more important than ever. It’s imperative that realtors know the rules which govern their conduct in a multiple offer situation and that they apply that knowledge properly every time. There’s really no other way for us to retain the respect of the buying and selling public. We’re supposed to be the experts here, for christ’s sake.
The bottom line is, I suppose, that If I was looking for a house, or listing a house, I’d ask my realtor how many times in the last couple of years they’d had to compete for a property, or manage a situation where there were multiple offers. I’d ask them to walk me through a few scenarios. Explain how things are likely to go down, and what strategies they like to employ in competition. I’d make sure I was really damn confident in their abilities and their track record. Competence, after all, is the very least you deserve.