February 23rd 2020
See The Forest for Trees in Multiple Offers in London Ontario Real Estate
Multiple Offers might be one of the Biggest Issues in London Ontario Real Estate
Whenever conversation in business or pleasure turns to Real Estate in London, one of the most attention worthy topics is Multiple Offers. Everyone loves to discuss what happenned, how many offers, how much above list price things sold for??? Oh My! Can You Believe It! The World Has Gone Mad!!
So, What's going on? Well, a few things.
Firstly - A serious shortage of supply, particularly in the more affordable price ranges. Driven by rising prices as a result of the supply/demand profile and mortgage stress test rules that have limited (wisely or not) people's purchasing power, as a result many folks are staying put and renovating if necessary as well the ploddingly slow, and remarkably high cost of developing new land for the current and future demands in housing.
Secondly - Too Many People Making Offers. Demonstrated by folks that while fully aware of numerous offers on a property, choose to make list price or thereabout offers. The effect of numerous low offers drives up the final selling price, as the eventual winner is trying to calculate the cost effect of each additional offer, ie: perhaps 3 offers would suggest 2-5% over ask might win the day, while 66 offers (happened recently in London) would make one think that it might take 50% or more over list price to make a deal. More offer, depiste their merit or lack thereof, just drive up the sale price and as a result future sale prices for all those competing.
Thirdly - Pricing for Attention. It is commonly understood that if one prices a home, no matter the exposure, 5-10% above perceived market value, offers will not follow. In that case you wind up chasing the market with repeated price drops, often costing the seller time and money in the end. The current popular and successful method of home selling consists of thorough market research, price at or perhaps slightly below perceived value, then holding offers a week or so later. Sometimes sellers will be open to pre-emptive (bully) offers, but if they're priced wisely with enough market attention, they'll often wait until designated offer date and deal with a virtual stack of offers each one better than the last.
The Moral of the story is, don't offer unless you can truly compete, both price wise and carefully consider your clauses and conditions as they too can turn off a seller, almost as much as a low-ball offer in an over heated market.