Car­olyn Ire­land – Globe and Mail

Say you’d been search­ing for a condo to buy and handed over an offer on a cool place in the Queen Street West area, only to find out that the owner rejected not just your offer but every one of the 15 oth­ers. You’d feel irked, right? And just imag­ine how burned you would feel if the same seller came back to the mar­ket for another round – at a higher price.

David Flem­ing under­stands the outrage.

The agent at Bosley Real Estate Ltd. has seen this sce­nario play out more often than usual 2012′s excep­tion­ally hot spring mar­ket in Toronto: Sell­ers angle for a bid­ding war; if com­pe­ti­tion doesn’t mate­ri­al­ize or the bids aren’t rich enough, they wait a short inter­val then raise the ask­ing price.

“Expec­ta­tions are crazy right now,” he says.

Mr. Flem­ing – who draws read­ers who like the out­spo­ken style on his blog – closely fol­lowed one such case which played out recently as the mar­ket was head­ing toward the peak of the spring frenzy.

The action unfolded after a condo unit with one bed­room and a den had lan­guished on the mar­ket for seven weeks with an ask­ing price of just under $360,000. The build­ing had been recently reg­is­tered which meant that own­ers were enti­tled to put their units up for sale and dozens of them did so over the course of a few months.

So, in order to make this one unit stand out from the com­pe­ti­tion, Mr. Flem­ing reck­ons, the seller and his or her agent tried a new tactic.

They brought out the list­ing again at the eye-popping ask­ing price of $159,900. They set a date and time when all offers would be reviewed and waited for the fra­cas to ensue.

Mr. Flem­ing ranted (his word) about the out­come on his blog: After all 16 par­ties put their bids on the table, not one had upped the ante suf­fi­ciently to sat­isfy the seller.

A few weeks passed and the unit was listed once again – at a lit­tle less than $359,000 this time. It’s not hard to imag­ine that the seller was hop­ing for this amount all along and the ridiculously-low ask­ing price was just bait.

“All they did was waste the time of not just the 16 buy­ers, but also the agents, lawyers, par­ents, mort­gage bro­kers and every­one else involved.”

Then there are the fraz­zled nerves that buy­ers suf­fer in such skirmishes.

Many of those bid­ders prob­a­bly offered huge amounts over the ask­ing price, he says, and they would undoubt­edly feel deceived.

Mr. Flem­ing stresses that the seller and agent did noth­ing ille­gal or even against indus­try rules. But he does think their actions were mis­lead­ing. He rails against game-playing because he says it tar­nishes the rep­u­ta­tion of the industry.

“It’s very frus­trat­ing for every­one involved,” he says. “It makes peo­ple not want to work with that agent. It makes peo­ple not want to look at the house.”

The seller’s agent, he adds, should not try to appeal to a client’s greed. Some peo­ple are cash­ing out after liv­ing in a place a long time but oth­ers only bought a cou­ple of years ago. Every­one seems to expect a big gain, says Mr. Fleming.

“I think it really falls back on the list­ing agent to edu­cate their sell­ers and not promise them mul­ti­ples. The sell­ers’ expec­ta­tions are so high and emo­tion pays a huge part in real estate.”

But per­haps prospec­tive buy­ers bear some respon­si­bil­ity: they can walk away and refuse to par­tic­i­pate in a melée.

“You really, really have to con­sider, do you want to get involved,” Mr. Flem­ing agrees. “When you know a game is being played, I would advise my clients to sit it out.”

Mr. Flem­ing says the ris­ing num­ber of list­ings at this time of year com­pared with the short­age in Feb­ru­ary means com­pe­ti­tion is less intense. Mul­ti­ple offers are still com­mon for good prop­er­ties in favoured neigh­bour­hoods, he adds, but the bat­tles that draw 13 or 15 buy­ers have sim­mered down.

Many agents are report­ing that they’ve seen offer dates pass with­out a deal. That’s when a strat­egy designed to draw mul­ti­ple offers can backfire.

When that hap­pens, it’s not uncom­mon to see the same house come back on at a higher price.

“If your house didn’t sell at $999,000, why would you put it back on for $1.1-million? The mar­ket has spoken.”

Com­ment: I hear you. I have seen it myself, makes no sense at all… But we are beholden to our seller clients, regard­less of how ratio­nal they are.

The sell­ers will often try to jus­tify the higher ask­ing price by point­ing out improve­ments they’ve made, such as redo­ing the kitchen.

“And even that was prob­a­bly 10 years ago,” says Mr. Flem­ing. “No one cares about your 10-year-old kitchen.”

Com­ment: I love this guy!

In other cases, a house doesn’t sell at the dead­line and a prospec­tive buyer will make an offer later for the ask­ing price or there­abouts only to have the seller come back with a higher number.

“When they sign back higher than the ask­ing price – what are they think­ing? That was three weeks ago.”

What do you think: Would you feel betrayed if you joined a round of bid­ding and the seller ulti­mately turned all buy­ers away? Or is it fair game: sell­ers have the choice to list their house for sale with no oblig­a­tion to strike a deal?

—————————————————————————————————–
Con­tact the Jef­frey Team for more infor­ma­tion – 416−388−1960

Lau­rin & Natalie Jef­frey are Toronto Real­tors with Cen­tury 21 Regal Realty.
They did not write these arti­cles, they just repro­duce them here for peo­ple
who are inter­ested in Toronto real estate. They do not work for any builders.
—————————————————————————————————–

Related posts:

1. Bid­ding wars for Toronto’s hous­ing mar­ket unlikely to slow down The real­ity is, if you want to take Lea­side as…
2. Real­is­tic pric­ing key to sell­ing home Home buy­ers can expect more choice and lower prices in…
3. Bid­ding wars make a come­back House sales for the first two weeks in May were…
4. House sell­ers, buy­ers balk at bid­ding wars In a mar­ket where list­ings are down sig­nif­i­cantly com­pared with…
5. Bid­ding Wars The prob­lem is sup­ply and demand. Right now, demand WAY…