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My take on the current New West market

New West has seen its share of recent price increases for detached houses. It took off right at the start of January and made a few big leaps. Over the past 6 weeks there have now been a number of sales where the final price was more than $250,000 over asking price. We’ve leveled off somewhat, but prices are now reaching above $1M more often than not.

Fun fact: We recently saw a new record set for the highest priced sale ever in New West and it crossed the $2M threshold. Here’s a link to the details if you feel like snooping – 101 College Ct

I know a lot us (myself included) are now more focused on condo and townhouse options to raise our families. It’s a common trend that is driving activity and prices upward for strata properties that will accommodate a family. I expect to see a lot of growth in that segment this year.

Condos overall are on an upward trend and I notice a lot of investors trying to get in before a big lift. Now is definitely the time to talk if you’ve been thinking of an investment condo.

I enjoy keeping a close eye on the New West market. Please contact me directly if you want to get into it in more detail. I’m here to help and share my knowledge.

All the best,
Matt

Why do some properties sell for $150,000 over asking price?

It can be very common in a multiple offer scenario for a house to sell for $10,000 to $20,000 over the asking price. Recently there have been cases of houses in New West selling for more than $100,000 over asking price. Why did that happen?

Every house and every scenario is different. There is truly no one exact explanation. The simple, summarized explanation is that it’s a combination of timing (the right combination of buyers all at one time), an exceptionally well kept home, a strong floor plan, low supply and high demand.

Demand has to be at a point that there is a long list of (up to 20+) buyers who are serious about considering an offer on the property. In the end it results in 10+ actual offers on the property. Each buyer wants the house and is calculating in their mind how much they want the house, how high they need to go to stand out as the best, and if they think the home is worth that price.

In rare cases, multiple buyers come in very strong, ridiculously high, but still don’t stand out because their competitors have done the same. The listing agent (representing the seller) gives an opportunity for those offers to be improved. It’s at this stage that if any one buyer simply must have this house that they blow the doors off with an offer in excess of $100,000 over asking price. It’s rare. It’s hard to predict when and how it will happen. You can never know for sure how many buyers will fall in love with a house until you have already put a price on it and put it on the market.

A home priced close to current market value will always attract interest. If multiple buyers fall in love and drive up the price, then, well, they are the market. They have determined a new market value for that house. If there are enough other buyers similar to them in the marketplace, the prices will persist and adjust to that new benchmark.
This type of frenzy will often produce more supply in the marketplace (sellers looking to maximize value). The list of buyers will shorten as they each find their dream home and the market levels off, for a time…

How to win with competing offers

Let me first say that there is no guaranteed method to winning a multiple offer. There have been many occasions where, as the listing agent, I have seen an offer that should have blown the seller away and been the clear cut winner, only to be beaten by another that was even more appealing. When you are competing you make your best offer. You have to be prepared that it may not be thebest offer.

What can you do to make your offer as appealing as possible?

Check off every question and concern you could possibly have before making the offer. If possible, make your offer unconditional. Meaning that if your offer is the best, it is signed, accepted and a done deal right there on the spot. The sold sticker goes up and you win!

Ask about terms (closing dates, etc.). An agent experienced with multiple offers will know how to gather the information the buyer needs to write an appealing offer.

Investigate the updates throughout the property. Were they done with permits? Are there receipts from qualified tradespeople? Are there service and maintenance records?

Consider hiring a home inspector to conduct the inspection prior to writing your offer. It gives you full peace of mind going in. However, it’s an upfront cost that can feel somewhat wasteful if your offer doesn’t win. A pre-inspection is a strategic move that should first be discussed in detail with your agent.

Most important: Write your best price. There is rarely a second chance with multiple offers. You must put your best foot forward and feel confident and comfortable that even if you lose by only $1,000 you won’t have regrets.

If your offer is the best, but possibly needs a slight tweak that requires your initials, be available. If modifications are required and you are not able to initial changes immediately, the seller may move to the next option.

It should also be mentioned that just about every buyer has to lose once or twice in multiple offers to build up the confidence to do what it takes to win. When you lose, you are usually losing to a buyer who has lost a few times and reached the point where they were prepared to make an offer that wasn’t going to be beaten. If you want to win, listen closely to the advice from your agent. Every scenario is different. Experienced, strategic agents know how to appeal to the seller and help you write the best offer you can.

In summary: Write the highest price you’re comfortable with. Make the terms suit the seller, where possible. Do your best, and don’t get discouraged if you lose.

What is a “Bidding War” ???

“Bidding War” is a term used widely in the public and by the media. The industry term is “Multiple Offers.”  I shy away from using bidding war because I feel it creates an image of multiple buyers standing on the front lawn shouting numbers like a live auction. In reality, it’s more like a one shot, sealed bid auction. The buyer is certainly competing but prices are not disclosed to other parties and they are not being auctioned up in an emotional frenzy. The buyers make an offer at their maximum price and either get the house or not.

A multiple offer scenario occurs when two or more buyers choose to make an offer on a property at the same time. All interested buyers (or their agents) are informed that they are competing with one, or more, offers and provided a formal time for offer presentation. It should be explained to all interested parties that the offer with the terms (price, closing dates, inspection, etc.) most favourable to the seller will be selected (and likely accepted).

The other offers don’t typically receive a counter offer, unless two or more are quite similar and need one to improve and stand out from the crowd. It is possible that the winning offer will receive a counter offer to slightly adjust dates or other terms, but price is not usually a talking point if it is the stand alone, best offer.

The buyers always have control. They choose their maximum price and present it up front. That maximum does not have to be at, or far in excess of, asking price. Each buyer has their own maximum. All offers are all laid out in front of the seller and only one wins. The seller’s selection process is discussed in detail in How to Win a Multiple Offer.