A basic driving force behind real estate markets everywhere is a simple one of supply and demand: low supply + high demand = rising property values. This creates what is termed a “seller’s market”, because the sellers are in the driver’s seat of sale prices. The opposite also holds true: excess supply + low demand = decreasing property values, and what is considered a “buyer’s market”.
The pandemic has caused unprecedented volatility in the real estate market over the last three years, and listings in the GTA moved from always having offer dates, to never having offer dates, to somewhere in between. Some media sources tend to give the impression that an offer date is simply an indication of greedy sellers, and I want to dispel that myth.
When my seller clients decide it’s time to list their home, I use a variety of tools to determine my opinion of the property’s market value. Once a target sale price range has been agreed upon with my clients, the sellers choose one of two options for marketing the home: List the property at the market value price and wait to negotiate a (typically) single offer; or list the property at a *slightly* lower value, and review offers on a specific day (the “offer date”), ideally negotiating with multiple potential buyers.
When there is high demand for homes, listings can sell within a day of hitting the market. One of the main factors for setting a lower price and holding an offer date is to show the home to as many potential buyers as possible. I know how frustrating it can be for clients on the buying side to see an interesting listing either online or in person, only to hear that it has sold before you could make an offer. Opportunities can be missed on both sides.
Of course, offers involve much more than simply a dollar value. Key features of an offer include not only the sale price, but the closing date, the amount of the deposit, conditions (such as financing or inspection), or other clauses/requests from the buyer. Does the highest dollar value offer always get the deal? Sometimes not. The idea of having more than one offer to consider is to allow both sellers and buyers to negotiate the various terms, in addition to the sale price. I have participated in more than one transaction where the dollar value of competing offers was less than $1,000, and the determining factor for the winning offer was something other than price.
Most objections we hear about multiple offer situations are due to the blind nature of the bidding process. Buyers are asked if they wish to improve or change their offer, and they worry there is a risk of paying more for the house than they needed to. I think there is a different way to view this process: if the bids were open, then as with any other type of auction, each side would likely continue to raise their bids once they realized they realized they were in second (or third) position. In my experience, there have been many occasions where if the bidding process were not blind, the sale price would absolutely have been higher, not lower!
Despite the recent market fluctuations, strong demand for housing in the GTA is expected to continue. The Forbes Global Livability Index places Toronto at #8 worldwide of the best cities to live in, we have historically high immigration, we have more buyers than we do properties for sale, we have millions of Millennials ready to purchase their first home – and Baby Boomers willing to help them achieve that dream.
Selling or buying a home will be one of the biggest transactions you’ll make in your life, and you need an experienced professional in your corner to help you navigate the process. As your trusted Realtor® of choice, I will ensure you and your family’s dreams are in the best possible hands!
