REAL ESTATE
 
 

In recent years, as the housing market in Toronto has become more heated, there have been many news articles about houses selling in bidding wars for several hundred thousand dollars above their asking price. This certainly sounds exciting and profitable for the home seller. However, upon further examination it becomes clear that for many of these home sellers, they may not have chosen the best strategy to maximize their profit.

First, let's define what a bidding war means. This is when the seller will list their house at an artificially reduced price, show buyers the house over a period of about a week, and then have an offer date where all interested buyers present their offers. The expectation is that they will sell for well over the asking price, and have multiple buyers bidding against each other.

 

Something that I find surprising is that for most people who sell through a bidding war, they never seriously consider other options. They just follow the advice of their listing agent, and don't do a thorough analysis of what has worked best for other similar properties in their neighbourhood. When I help people to sell their homes privately, we always look at all relevant sales and get a market valuation through the help of an appraiser. We look at homes that sold through bidding wars, and also homes that sold using a more traditional method, which can be described as listing the house at the price the seller wants to sell for, and accepting offers at any time.

In almost all cases, we've found that on average, houses that sell using the traditional method have a higher success rate, and they also sell for a higher price. That's right, homes that sell using a traditional strategy will often sell for a higher price than bidding war sales that sell for several hundred thousand dollars above asking price. Some of my clients find this very surprising, as it seems like we hear nothing but good stories about bidding wars. However, when you break down the bidding war process, it becomes clear why the bidding war strategy might yield worse results.

 

The most important thing to consider is that by relying on a single week of exposure for a property, a seller is definitely missing out on potential buyers. What if their ideal buyer is on vacation that week, or focusing on a different property, or is a week away from starting their search for a new home? These are all buyers a bidding war doesn't target, but a traditional home sale would. Something else to consider is that many buyers dislike the bidding war process, and after losing out on a few homes that list through bidding wars they focus on houses selling using the traditional method. Bidding wars are very stressful, and the process of submitting an offer, waiting for hours in the car outside the house on the offer day, then finding out it was all for naught is a very unpleasant buying experience. In the end, fewer potential buyers means a smaller chance of finding the one buyer willing to pay top dollar for a house.

 

Another misconception we hear is that when houses are selling for so much higher than the asking price, people assume that every bidding war sale must be a record price for that neighbourhood. This is rarely the case, and something to remember is that there is a built-in safeguard that prevents buyers from significantly overpaying for a house in the form of a mortgage. If there is any question about the purchase price of a home, the mortgage broker will always do an appraisal, and if the appraisal doesn't match up with the purchase price, then the financing won't be approved.

 

So if there is data that shows the bidding war strategy doesn't necessarily benefit home sellers, then why have they become so prevalent? If you consider the nature of a bidding war, which is largely based around arranging a quick sale, then it is clear the person who benefits the most from this strategy is the listing agent. They do less work when coming up with the listing price than they would in a traditional sale, the house is only listed for a week, and then there is one very busy evening as they review offers. Then after just a week of work, they get to move on to the next house.

 

Whenever someone is selling their home, they should treat it as they would any large investment and do a thorough analysis, consider all options, then make an informed decision. In some cases, especially if a quick sale is desired, then a bidding war can be a viable option. In many cases though, using a more traditional method will result in higher profits for home sellers.

Read full post

Marketing your home in Greater Vancouver & BC

PAGE INDEX : Preparing your home for sale | Marketing

Preparing your home for sale

Marketing your home in Greater Vancouver & BC When you decide to sell your home in Greater Vancouver, a REALTOR® can help you prepare your home for sale and help you market it using the MLS®. An attractive, well-kept home generally has a better chance of selling faster. Review the Realty Link In Print article "Preparing your home for sale" for a few ideas to help you perk-up your home's appearance. More importantly, be sure to practice regular home maintenance check-ups. As any REALTOR® will tell you, regular preventative maintenance is vital to maintaining your property value. Use our "Home Maintenance Checklist" when inspecting your home.

[Top of Page]

Marketing

One of the most powerful marketing tools your REALTOR® will use is the local Multiple Listing Service (MLS®), a co-operative marketing system to ensure maximum exposure of properties for sale. REALTORS® use this central database of properties to match buyers with properties for sale. "A Consumer's Guide to the Multiple Listing Service" will provide further information on the MLS® system.

When your property is added to the Real Estate Board of Greater Vancouver's MLS®, your property automatically gets added to the RealtyLink - On Line Web site. Your REALTOR® can also place adds in local newspapers such as RealtyLink - In Print, place a For Sale sign on your front lawn, and hold open houses and showings. Your REALTOR® will also network with other local REALTORS® to find out if they know of any potential buyers.

[Top of Page]

Read full post

Listing your property in Greater Vancouver & BC

PAGE INDEX : The Listing Presentation | The Listing Contract | REALTOR® Fees.

When you decide to your home in Vancouver, BC, Canada or anywhere in Greater Vancouver, the Real Estate Board of Greater Vancouver can help you with listing your property.

The Listing Presentation

Without any obligation to hiring a Realtor, you can ask a REALTOR® to come to your house to give a "listing presentation." The REALTOR® will present his or her qualifications, explain how they will market your home, and most importantly provide you with a comparative market analysis (CMA). The CMA details information on past sales in your neighbourhood, homes that didn't sell and homes that are currently for sale. The REALTOR® will use the CMA, market statistics and his or her knowledge of the neighbourhood to help you set a price for your home.

The REALTOR® can also prepare an estimate of the net proceeds you will receive when your home sells. This is based on the suggested sale price of your property and any financing you have in place.

[Top of Page]

The Listing Contract

Once you have selected a Realtor, you will need to sign a listing contract in order for your REALTOR® to list your property for sale on the Multiple Listing Service (MLS®), a central database of properties for sale that is available to REALTORS®.

The contract will contain:

  • The price of the property.
  • The address and legal description of the property.
  • The existing financing arrangements.
  • A list of items (known as fixtures) that will not be included in the sale, i.e., a light fixture.
  • The commission amount.
  • The expiry date of the listing contract.

Your REALTOR® will also get you to fill out a Property Disclosure Statement, a form where you indicate the condition of your property.

[Top of Page]

REALTOR® Fees

Usually a REALTOR® works on a commission basis and only receives payment upon the successful sale of your home. The commission can be a percentage of the total sale or a flat rate. The commission is not set by law or by local real estate boards. It is negotiable between you and your Realtor.

Read full post
Categories
The data relating to real estate on this website comes in part from the MLS® Reciprocity program of either the Real Estate Board of Greater Vancouver (REBGV), the Fraser Valley Real Estate Board (FVREB) or the Chilliwack and District Real Estate Board (CADREB). Real estate listings held by participating real estate firms are marked with the MLS® logo and detailed information about the listing includes the name of the listing agent. This representation is based in whole or part on data generated by either the REBGV, the FVREB or the CADREB which assumes no responsibility for its accuracy. The materials contained on this page may not be reproduced without the express written consent of either the REBGV, the FVREB or the CADREB.