Here’s a recent article in The Star where I provided some advice and comments on bidding wars.
The trend continues. Properties are selling for above asking price in hot markets across the country. In Toronto, it’s becoming the norm. Some say an epidemic.
Last month I reported on sales that sold for 128% and 138% of list price. We’re talking about selling prices of $1,035,000 and $1,150,000.
A few days later, we saw a home sell for $1,308,808. That’s $479,880 above asking price or put another way, 158% of list price. Sale prices this much above asking are either a clear case of listing too low, in the attempts of attracting multiple offers, with the hope of getting a higher than normal selling price… or, someone is paying way above market value for reasons beyond my understanding.
TIPS TO SURVIVING A BIDDING WAR
They say there are no winners in war. When it comes to real estate sales today, there is always a winner but there could also be a loser. Let’s make sure you aren’t the latter.
- While you may not be able to avoid bidding wars, take the emotion out of it.
- Approach your purchase as investment. After all, it’s probably the biggest purchase of your life and this makes it an investment.
- Do your homework when it comes to market values.
- If you are using a realtor, and I strongly recommend you do, then get them to provide you with their opinion of value. Use this as a guideline.
- Experienced auction buyers always put a price limit prior to submitting their bids. Do the same. Write it down. It’s a guideline. You may have to stretch on your price but at least you have some sort of limit.
- Use the 7 year plan. I recommend everyone plan to own real estate for 7 years. It allows for enough time in any price correction to recover market value. It will amortize your acquisition and disposal costs. Factor in how much more per year those extra purchase price $$s will cost you over 7 years… and if you are comfortable with that.
- make sure your mortgage finances are in order. Get a preapproval but understand what that preapproval involves.
- discuss what the property could appraise for. Your mortgage broker should also be able to get some opinions on value.
- Lastly, if you bid and lose out, it will be disappointing. But something else will come along. It always does.
Your best interest is my only interest. I reply to all questions and I welcome your comments. Like this article? Share with a friend.
Steve Garganis 416 224 0114 firstname.lastname@example.org