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Bidding wars
Bidding wars used to be a trademark Toronto strategy for home buyers. Home buyers are testing sellers with the strategy of low balling a property listing, as discussed in a recent Globe and Mail article.
Igor Dragovic, a local urban land economist, recent number crunched numbers using data collected from the Toronto Real Estate Board to learn that of 4,230 home sales in 2019 in Toronto’s West end – only 29 per cent of homes sold for over asking.
The district he analyzed contained homes that – shockingly – sold for at or below the listing price. He included every form of housing – including semis, detached homes, condos and townhouses.
“I was a lit bit surprised to see this in downtown west, generally a pretty hot pocket in housing right now.” Dragovic told the Toronto Star.
What’s most fascinating were his observations about different Toronto neighborhoods. Dragovic found that the Bay St. corridor had the lowest percentage of homes selling over asking, 14 per cent.
However, neighbourhoods such as Dufferin Grove and Trinity Bellwoods, saw about 50 per cent of homes selling for over asking. In Trinity Bellwoods for example, 76 homes sold at or under the listed price while 75 sold over.
The low rate of condos that sold for over asking is “surprising” to Dragovic.
Does the strategy work?
He noted that bidding wars might work in certain neighbourhoods, but not in others. For example, the strategy is successful in places like Trinity Bellwoods, where the homes went for, on average, about 18 per cent over the asking price. Homes sold over the listing price went for an average of $871/ sqft, while those sold at or under the listing price sold for an average $811 per sqft.
By contrast, Dragovic notes, bidding wars don’t seem to be a good strategy in the Bay Street corridor. Homes there sold over listing price go for about $989 per square foot.
John Pasalis, president of Realosophy, says that listing your property too low is like rolling the dice.
Does Area Matter?
“When you list your home for sale in a particular area, part of how many offers you get is how nice your house is compared to the other houses that got listed that week. How many other houses got listed that week, what are they asking, and what nights are they taking their offers on,” Pasalis says, noting that his most recent listing in Leslieville went for exactly the $1.2 million that was asked.
“We weren’t confident because the market is less predictable now. We listed for $1.2 million and sold for $1.2 million ” Pasalis explained.
Realtor Desmond Brown says that more home buyers have access to market rates and can gauge the price in context of recent sales. “Every now and then, a new precedent will be set when someone pays a higher price,” Brown added.
“I always say there are two ways to a sale price; underprice and get a bidding war or price a bit over market value and negotiate a deal between one buyer and seller.”
Bottom line: don’t undersell your property with a low listing. You might just get what you ask for!
https://torontostoreys.com/2019/11/toronto-homes-over-asking/