Posted by: Daryl & Wendy Ashby | January 31, 2010

Winners & Losers

Having been involved in a number of “multiple offer” transactions on behalf of either a seller and buyer during the past year, it became painfully clear just how much stress is involved for both parties.

Certain price ranges tend to attract high demand and, where the presence of a suite (“mortgage helper”) is important to the buyer, it is not unusual to have 30 or 40 sets of folk visiting the offering.

This can often lead to anywhere from 3 to 10 offers being presented to the seller. Exciting for the seller, it can be nerve wracking for the buyers. One “winner” is accepted and a selection of “bridesmaids” emerge.

Offers typically range from somewhere below the asking price to, 2 to 8% above asking price with a stream of conditions (inspection, mortgage approval), all the way to the brave or foolhardy souls who propose “no conditions”.

It is not unusual to find the successful buyer unhappy, believing after all the smoke has cleared and their senses have overruled their emotions, that they may have paid more than what the home is actually worth.

Some criticism is often levied at the establishment of the “asking price”, when, with the benefit of hindsight, a final sale price emerges at a level way higher than that at which the home was offered for sale.

At the risk of incurring the wrath of certain colleagues, the question deserves being asked  – do we as Realtor® advisors have an obligation to discourage our selling clients from severely under pricing the property listed for sale?

There is however an argument to be made that this aberration is brought about by the market when a high level of demand exists and demand is directly associated with a lower number of homes being listed.

I will not assume to take a position in this matter other than to say, the market will be driven by Seller’s who engineer the dynamics of the market and buyers who leave their common sense at home.

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