House hunters in the Toronto-area have kicked off 2020 with a resounding message: They will compete ferociously for the rare listing that arrives on the market.
In Brampton, Ont., an astonishing 77 bidders entered the melee for one small, rundown house.
“I think we were all shocked,” listing agent Paula Mitchell of Royal LePage Meadowtowne Realty says.
In the Junction neighbourhood in Toronto’s west end, 33 offers came in for one semi-detached Victorian, with the triumphant buyer paying $470,000 above the asking price of $949,900.
A couple of bullies tried to pre-empt the competition at 109 Maria St. but the sellers decided to wait for the offer date, listing agent Robin Millar of ReMax Hallmark Realty Ltd., says.
Ms. Millar says the desperately low inventory of properties for sale is responsible for the intense competition. Prospective buyers fear that prices will escalate even more if they wait, she says.
“I think they just feel like they have no choice.
Ms. Mitchell says the bidders for 9 Holmstead Court in Brampton ranged from young, first-time buyers to investors and flippers. She also points to the influx of immigrants to Canada, with Brampton as a popular destination for many new arrivals.
She decided on an asking price of $400,000 for the 1,100-square-foot house because it needs a lot of work, she says. She figured a new owner who wants to bring it up to date will need to spend between $50,000 and $100,000.
Other nearby houses have sold for between $460,000 and $560,000 and even $575,000 – depending on their condition, she says.
“We priced it attractively but it wasn’t a fire sale.”
The entry-level house sold for $566,000, or $166,000 above the asking price.
Ms. Mitchell says even sorting through so many offers was a feat of logistics. She had three offers registered the day before the deadline and the next 74 poured in the following day. Her daughter, real estate agent Krystle Mitchell, assembled a group of colleagues in the boardroom at 1 p.m. to go through all of the bids, which were delivered by e-mail.
“That was a team effort – going through the offers,” says Paula Mitchell, who used a software program to notify interested agents every time a new bid was registered.
She adds that some bidders were sweetening their offers as they learned of the number of rivals entering the fray while others dropped out entirely.
Linda Cordiano of Royal LePage Elite Realty was one of the agents receiving an alert on her phone with each additional offer.
She knew there was intense interest after she visited the house and saw the activity.
“There were maybe 30 agents in their cars all down the street, running in and out.”
Ms. Cordiano is working with one couple who considered making an offer but decided against it after about eight bids had been registered.
“If they have a very small budget, you know they don’t stand a chance,” she says.
Ms. Cordiano says her clients could only have paid about the asking price, with another $100,000 in their budget for renovations.
“We could have submitted too but we would have been the 78th offer – that’s all,” she says.
Ms. Cordiano also believes that the lack of inventory caused the melee. Any buyers with a budget under $1-million are often forced to compete, she says, even when they’d prefer not to.
She also sees buyers who feel anxious about the recent upswing in prices after a couple of years of stability. For some, the fear is that they will pay more later in the spring.
“They don’t want to take the risk of waiting.”
For Holmstead Court, the agents worked with the five best offers and the sellers made the final decision at about 8 p.m., Ms. Mitchell says. Five of the offers landed after that time but the house was already sold.
Ms. Mitchell says the buyer brought a very substantial deposit with the attitude, “I want this house. I’m bringing a hefty deposit. I mean business.”
The winning bid and two other offers came from Ms. Mitchell’s Royal LePage office. In such cases, they have another agent represent the clients, she says.
Ms. Mitchell is amazed that, so early in the year, there are more than 70 prospective buyers out there who missed out on the property.
In the past couple of years, many house hunters shied away from bidding wars after the market slowed down following a high-octane run-up in prices in 2016 and 2017.
“Buyers were not going to compete.”
She would like to see more sellers decide to list soon so that the market retains some calm.
“It’s a scary thing to think about how things can get out of hand.”
Ms. Millar at ReMax Hallmark began to hear from a few homeowners as word got out about the sale in the Junction. She says some homeowners are motivated to list when they hear there are so many buyers circulating.
She is encouraging all of her clients to list early in the year while there is so much pent-up demand and so little inventory.
She says the early reports of eye-popping sales can spur on buyers, but the buzz can also discourage some buyers who don’t want to get carried away and overpay in the heat of competition.
“It can also turn a lot of people off,” she says. “It’s so emotional.”
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