The other day, a friend and former client of mine sent me a link to a house for sale in Oakville. He told me that he’d noticed a string of cars driving slowly by the house and it was kind of creepy so he hopped online and there it was. Single family ranch homes in this neighborhood in decent shape usually go for about $215,000. This coming soon listing was advertised around $145,000. “What’s going on?” he asked.
Well, there were a few things going on. For one, the house was being represented by a pretty shrewd listing agent in town. This tells us something. This real estate agent can run a comparable sale analysis, and he isn’t too low by some $70,000. If anything listing agents will usually miss to the high side. It’s highly likely that this agent is listing this home with the anticipation of a quick sale and multiple offers.
Are Multiple Offers Bad?
That brings us to the main issue. This house isn’t going to sell for the asking price. The agent has obviously created a feeding frenzy. As evidence, just note the cars constantly driving by the house even though there is no for sale sign and the property isn’t even available to purchase yet. All day, people are driving by that house and anticipating themselves telling their friends and family what shrewd negotiators they are when they buy that house for so little. Such validation awaits!
This is a game. The title of the game should be the actual buyer is the biggest sucker. I suspect that the house will sell for more than what a normal house will sell for in that same neighborhood. Why? Everyone who drove by is writing an offer. No one wants to tell their friends and family that they lost out on the deal of a lifetime. And, no one wants to lose to someone else. The only way the price can go is up with such motivated buyers.
There’s nothing wrong with what this real estate agent is doing. There is something wrong with buyer’s agents who council their buyers to spend whatever to get the house. I mean, at least look at the comps in the area and determine a reasonable asking price.
What Would Deerwood Realty Do?
Since we know this is a game, and we know that the winner of the home is the real loser, I would advise my buyers to look elsewhere. I’ve done this in the past and buyers don’t believe me. They are convinced that they are going to get this house for pennies on the dollar. It may take more than a month, but I’ll get the sales information, and when I show it to buyers, they usually act like they weren’t really interested in THAT house anyway.
It’s important to take a look at comparable sales when making an offer and not get too caught up emotionally in the purchase. If there are multiple offers, perhaps this house just isn’t the one for you. That can be hard to accept, but in the end you are going to save yourself a lot of money, and when it comes time to sell that home, you can bet that you have a much better chance of selling it than someone who has paid up for their new home.