16 Offers....A Tale from the Trenches

Online ads that say "Sold for $100+k over list" & beautiful homes selling for under market value....how do we reconcile these 2 things in the same market?

Marketing? Strategy? Luck? (or bad luck as the case may be)...

Let's tackle the "Sold for $100+k over list" property first:

Reality: There was a listing strategy in place to attract as many buyers to the property as possible with an unrealistic listing price that was $100+k below what it was expected to sell for.

Result: The property sold for roughly the same price that similar properties in the same condition sold for in the same neighbourhood in the same time-frame. It's only fair to note that this strategy can also result in a selling price OVER the expected market value & I've successfully used this strategy myself as well. Why? Because when we represent the seller, that's what's in the seller's best interest.

Winners: The sellers obviously - they can feel confident that the property sold for the highest price possible given that they had 16 offers, lol, AND the listing agent has also enhanced their reputation to future sellers by being able to advertise such a shocking statistic.

Losers: The Buyers & their agents. This strategy always brings at least a few buyers to the table who can't afford the property if their agent isn't properly advising them. This scenario also creates a ton of confusion & questions like, if it sold above market value, will it appraise? Will the "winning" buyer be able to close if it doesn't appraise? It also raises red flags for lenders when they see a property sell that far above the listing price.

This scenario can backfire as well, like in the case of a beautiful home that I showed my buyers last week which sold for less than I think it should have:

Reality: A beautifully updated home was listed for sale with a set date to review offers. The price I felt was a little under market value, but certainly nowhere near as under-priced as the property in the 1st scenario. My clients loved it!

Result: The property only got 1 offer on offer night, and it sold for the asking price. My clients decided not to make an offer because we felt the true value of the home was above their budget & they wouldn't stand a chance in multiple offers.

Winners: The buyer who bought the house for asking price. I think they got lucky & ended up with a great deal being the only offer on the table but that could easily have changed if another buyer had come forward.

Losers: The sellers. By about 3-5% in my opinion. How many other buyers were afraid to compete?Had there been more offers it may have pushed the price to where I think it should have been. Or if the sellers had listed it at actual market value they may have gotten the higher price or at least closer to it than where they ended up.

So what can we learn from each of these scenarios? Well it depends on who you are...

As a seller, strategy matters...A LOT! It's not enough to have a beautifully renovated & staged home in a great neighbourhood in order to sell for the highest price possible.

As a buyer, get educated on the market; understand the different nuances that affect the price of a home; be prepared to cut through the noise & distraction of marketing & strategies to see if a particular property is worth your time & effort. And so many more...but I'll leave it here for today!

Until next time,