Paul Johnston planted a “for sale” sign in the lawn of a three-bedroom house in Toronto's west end recently and immediately had hordes of people filing through to view the property.
Based on the buzz and the eye-catching asking price of $669,000, the agent for Right at Home Realty expected about five bids at the offer deadline. Instead, there were two.
Witness the downside of the rampant bidding wars that have erupted in the big cities recently, says Johnston, who reckons that buyers are starting to rebel.
“There was that anxiety among potential purchasers that it would be such a stampede.”
The house did sell for $55,000 over asking, but Johnston is sensing angst among buyers who fear that prices are escalating too quickly.
But judging by the deluge of calls Johnston has received from prospective sellers in the past few weeks, buyers should have more to choose from in the coming months.
Housing markets in Toronto, Vancouver and Calgary have all been ablaze lately, but many agents acknowledge that a reckoning may be coming.
Homeowners who were thinking about selling next spring are accelerating their plans, and a surge in listings will likely cool the competition.
“It's not going to take a remarkable change in the landscape for that rebalance,” says Johnston.
Johnston is also seeing buyer rebellion in the form of bully offers. This tactic changed the rules of the game when it emerged a couple of years ago.
Instead of politely waiting for the date and time when a seller agrees to consider all offers on the table, the “bully” jumps the queue and lobs a bid days earlier.
The seller's agent is obligated to take the offer to the client.
Two or so years ago, bully offers were considered to be unusual, rude and inappropriate, Johnston says. Now people are getting more comfortable with the tactic.
Bully offers seem to be happening more often because buyers are just so annoyed that the market has gone back to bidding wars after months in the doldrums. Some buyers refuse to comply with offering at a set time because, they argue, that time is just an artificial deadline designed to generate a bidding contest.
They also are trying to secure a deal up front instead of risking losing out to a higher bid later.
The bully sometimes wins because, while the seller's agent will madly scramble to contact all of the agents who have shown the property, it's often not possible to reach them all, Johnston says.
“When you have 80 showings, it's really impossible,” says Johnston. “Then you have to say to anyone who was considering making an offer, you have four hours, not four days”.
The practice is a nightmare for the selling agent, he says, and it absolutely incenses buyers who become “irate that the party that was planned for Wednesday night was held on Sunday afternoon.”
Johnston says the spike in the market in September has shocked everybody he talks to.
And he sees lots of frustration among people who want to buy.
More often than not, he points out, houses are going on the market slightly – and sometimes drastically – under-priced. Then buyers are forced to wait a week before they can even make an offer.
No other marketplace works like that.
“It doesn't seem like the way we normally buy things,” he says. “It's wild. It's absolutely wild.”
