Of all the zany things happening in Toronto's real estate market last week, perhaps the most mind-boggling was the melee that erupted over a pleasant yet unremarkable condo unit near Yonge and Davisville.
Seven parties leapt into the competition and pushed the sale price to $420,000 – or 8 per cent above the asking price of $389,000.
David Fleming of Bosley Real Estate Ltd., is one agent who was staggered by the deal. He wrote about it in his Toronto Realty Blog.
Mr. Fleming says there's too much choice in the condo market right now for it to make sense for buyers to compete over a run-of-the-mill unit.
"I would never in this market tell a buyer to get involved in a bidding war on a condo," he said in an interview.
"A nice house in Riverdale maybe – but not a condo."
But that's just one deal and Mr. Fleming says it could be an outlier. The point is that the market is extremely erratic at the moment.
The numbers from the Toronto Real Estate Board show that sales edged up 2.4 per cent in the Greater Toronto Area in the first half of January compared with the same period last year. The average selling price rose by 4 per cent in the same period.
But the market was – and continues to be – choppy and weird. Some properties stagnate for weeks and then sell at a significant discount of the asking price, while others sell overnight for more. Mr. Fleming raises another example of a house in the west end that had an asking price just less than $550,000, which is a segment of the market that draws lots of buyers.
His clients were primed to make an offer on Tuesday, which was the night set aside for reviewing bids. But before they had the chance, the house was sold late last Friday when a bully offer landed in front of the sellers.
So-called bullies usually offer an amount so substantial that the sellers are tempted to snatch at it. But in this case, Mr. Fleming points out, the bully got the house for $580,000. It's a great deal for the buyer, he figures, but the sellers left a substantial amount of money on the table.
"I would have bought that house at that price and I'm not even in the market."
His clients, he says, would have offered $610,000 or $620,000.
"That was frustrating. My clients are crushed."
Elli Davis, an agent with Royal LePage Real Estate Services Ltd., cites the example of a house in Moore Park that received two offers and sold for $2.375-million. That marks a $176,000 premium above the asking price.
Mr. Fleming also had a buyer interested in that one, but the house sold within a day of coming on the market – before they even got over there to see it.
"Here I was telling him that I didn't think the property would move."
Mr. Fleming says lots of listings are sitting. He can't imagine another condo unit getting seven offers in the current market.
"There are a million cookie-cutter condos out there that no one cares about."
Ms. Davis says she tallied eight deals in January, 2012, but so far this year she has only recorded four. Still, she hopes to make up the difference by the end of the month.
"I've got a few in the works. Buyers just seem to be taking a little bit more time."
Ms. Davis says some buyers are speculating that prices may fall and wonder if they should wait. But others are willing to move if they see the right property.
"They want that security that the market isn't going to totally fall out of bed."
She's advising sellers to set a realistic asking price instead of setting an eye-catching price in the hope of sparking a bidding war. But she also cautions against asking too much. Prices have softened a bit since last spring, she says.
"If you're way too high, people will ignore you and buy something that's not."
Mr. Fleming says the lack of snow in January may have helped the market because house hunters had no trouble tramping around. And even the arctic temperatures this week didn't deter the buyers of 76 Langley Ave. in Riverdale. The home, priced at $949,000, sold Tuesday night for $1,129,000. "So much for the impending real estate crash," he says. But the volatile nature of the market makes it difficult for agents to predict how the spring will shape up.
"One day you might get five offers on a house and the next week a house down the street gets zero."