Who really "wins" in a bidding war?

With the Toronto market basically on fire, and decent performance in our local market in Woodstock, its time to discuss "bidding wars"

First, I'd like to talk about terminology:

I hear a lot of my cohorts in the Real Estate business use sports / competitive terminology to describe the process of offering on a home in a multiple offer situation.  I often hear colleagues say things like "we lost our second bidding war in the past week" or "my buyers won in a bidding war!"  It reminds me of how emotional the home buying process is for our clients.  I am not a huge fan of inserting even more emotion into the situation by using motivational terms like WIN or LOSE....  I question whether being a "Winner" in a bidding war has a long term effect on the happiness of our clients.  Sure, they "got" the house they "had to have" however, it is likely they paid too much for the home, and also likely that they went in without conditions that SHOULD have probably been in the offer to protect the buyer.  Hopefully none of those decisions come back to haunt the Buyer, but the likelihood is that they will.

So you've just found out the house you LOVE is going into multiple offers....  What to do....

Well, if you're a rational thinker, and not tempted by your emotions, in some cases you have the option of walking away.  In some white-hot markets like Toronto, you may have to wait for the market to soften in order to buy a home.  Don't worry, it may seem like forever, but it will happen at some point.

If you're absolutely smitten, and/or you HAVE to buy the home, here's what you need to do:

1. Remove as many conditions as you are comfortable removing.  Make sure you have a solid preapproved for your financing, and that you are comfortable with the conditions on the pre-approval.  For example, that you have all of your letters of employment, paycheck stubs, and have paid off your consumer debts.  I would never recommend not getting a home inspection, but if you're confident that you know the product in question, or you're a handy person, eliminating the home inspection clause can be the clincher for a multiple offer situation.  You can also get a home inspection done BEFORE you make an offer, with the seller's approval.  Minimize or eliminate as many of the other conditions as possible from your offer.

2. Put your deposit on steroids.  The deposit is the only protection that a seller has if you decide to walk from the deal.  Make it as large as you can afford, if you are serious about buying the house.  

3. Get your agent to go fishing.  Is closing date important to the sellers?  Are you flexible on close?  That can be HUGE for a seller.  Do they LOVE their pistachio green electric stove?  Better not ask for it to be included.  Do they have white doily lace curtains that you'll just rip down anyway?  Leave them off the offer.  What I'm getting at here, is that a properly trained negotiator (Your BUYER AGENT) can call the listing agent and go fishing for clues that might aide your negotiations.  A solid listing agent won't divulge any motivations, but we all know that no two Realtors are created equal...  It's worth a try. 

4. Know your comparables.  Your BUYER AGENT can provide you with recently sold comparable homes, and interpret the information contained herein.  Coupled with market trend information, he/she can advise you on an accurate market value estimate, and what offer price should be fair, given your conditions.

5. Put your best foot forward.  Although as mentioned earlier, I dislike the "win/lose" terminology associated with multiple offers, it's best to have given it your best shot and "lost" than to hold back and regret it.  Don't be silly though, like that guy who paid $421,800 over asking price.  Fairly certain there will be some regret in that situation, should the need to sell arise in, oh, say, the next decade.

6.  HAVE FUN.  Most consumers only buy a home once every 3.5 - 5 years.  If you happen to find yourself buying during a feeding frenzy, take it all in.  After all, its the kind of thing they make TV shows out of!


Ben Sage, Sales Representative. www.facebook.com/SageAdviceRealEstate  www.bensage.com www.oxfordcountyhomes.ca RE/MAX a-b Realty Ltd., Brokerage. www.a-brealty.com

Panicky Beurocrats threaten to put a damper on the Real Estate Market again....

In a chilling reminder of what happened to our market as of July 1st, 2010, it is today being speculated that Jim Flaherty, our wonderful Finance Minster may act to stem the scourge of consumer credit that us Canadians are apparently awash in. 

Pundits have been ironically warning us for nearly a year, as our spending lifts the country further from the throws of a double dip recession, and distances us from our under-water American counterparts, that our growing household debt is a problem. 

Am I talking about raising interest rates?  Not likely at this point.  This certainly wouldn't help our escalating Loonie keep pace with the rest of the world.  What is being suggested today has far more sinister consequences for the real estate market.  For buyers and sellers alike. 

The reduction of the maximum mortgage amortization from 35 years to 30 years (or even 25?). 

Two years ago, maximum amortizations were reduced from 40 to 35 years. The results on the Real Estate market were difficult to track, as local pricing / market trends were all over the place in 2008. 

This time around, I'm 100% certain that it will chill an otherwise recovering new and re-sale housing market in Woodstock.  Let's look at a scenario.

December 2010's average sale price in Woodstock was $183,107.

Assuming 5% down over 35 years at a fictional rate of 3.94%, your payment would be $760.65

At 30 years, payments translate to $821.28

Under the same terms, at 25 years amortization, the payment balloons to $909.37

With Woodstock property taxes increasing at par with assessment phase-in, HST now in full effect on Hydro, gas, and other services,  the dawn of Metered Water services, Time-of-day Hydro usage, Rising Garbage tag prices, and other financial pressures on the household, what do you think could happen to the value of your home? 

Fewer buyers able to buy, fewer sellers able to sell for "what they need" out of a home... 

Basically, a big chill.  2007-2008 all over again.

The time to list is now.  Seriously!



Ben Sage, Sales Representative. http://www.bensage.com http://www.oxfordcountyhomes.ca Re/Max a-b Realty Ltd., Brokerage. 519-536-7535. 521 Dundas St., Woodstock, ON

The Status Report - Woodstock Residential Market Update, January 2011

2010 was a very interesting year in Real Estate Sales in the Woodstock and District Real Estate Board.

Here's a look at some of the numbers:

The average sale price in 2010 was $218,216, up  3.44% from an average 2009 sale price of $210,957. For reference, 2008's average sale price was $215,202, and 2007 was $210,510.

Here you can view a Line graph of Historic Sales Values in Woodstock for the 2009 and 2010 Calendar year, as well as a bar graph illustrating the number of Residential homes sold in Woodstock for the same period.

It is interesting to note the trend - As predicted by myself and many in the sector at the conclusion of 2009, due to low interest rates and deferred purchasing, the first half of the year would be a busy time, with prices being pushed higher by steady supply and increased demand. Take a look at what happened to average sale prices after July, 2010.  The impact of the HST  had a large psychological effect on the buyers in the marketplace.  Additional factors that caused the decrease in sales volume and subsequently in the average sales price (by tipping the supply and demand scale) include the threat of rising interest rates ("buy now before the rates go up!), and tighter lending requirements. 

Going forward into 2011, I am confident that we will see very much a repeat of 2010 in terms of overall volume and average sales prices.  We've seen a pretty stagnant growth pattern year over year since 2007, and next year should look somewhat the same.  I expect slightly fewer number of sales year over year from 2010, and average sale prices to remain strong, but not growing much past the $220,000 mark.  It is expected by many industry analysts that we will have a very strong first half of 2011, followed by a stagnation in the latter parts of this year.  In other words, the graph should look strikingly similar.

Though we do not have any major factors on the horizon that might influence the market (such as the HST introduction), we do have several smaller factors influencing market strength.  The ongoing threat of higher interest rates has been somewhat subdued by latent recoveries in the domestic and American markets, but the recovery is gathering steam.  This means that EVENTUALLY interest rates will start to climb, and when they do, this is bound to have a negative impact on housing values.  It's been said that rates may begin to climb at the conclusion of spring 2011.

What does this mean for you?

Well, if you're thinking it's time to sell, the time to act is NOW.  Catch the wave that is likely to crest in March or April if you're looking for the best value in 2011. 

If you're buying, suppressed demand in the market means you will have time to act, but shorter supply trends indicate that prices are likely to increase throughout the year.  Be aware of interest rate trends, and make sure you get a RATE GUARANTEE if you are planning to buy.  If rates go up, you will be able to purchase less house for similar cost, so it makes sense to act soon. 

If you have questions about this post, or Real Estate in general, feel free to email me here.

I wish you all a safe and prosperous 2011.  I'm here, and ready to help!



Ben Sage, Sales Representative. http://www.bensage.com http://www.oxfordcountyhomes.ca Re/Max a-b Realty Ltd., Brokerage. 519-536-7535. 521 Dundas St., Woodstock, ON

Woodstock cracks top 100 cities for Growth and Entrepreneurship.

The Canadian Federation of Independent Business has just released a report outlining the top 100 Canadian Cities for Entrepreneurial growth. The report utilizes many different factors to achieve ranking, such as presence, growth, health, and policy environment for small businesses.

Congratulations to Woodstock for cracking the top 100 - #97! Only 4 places behind Toronto, the economic engine of the country!

For more details, check the full report, here.

Ben Sage, Sales Representative. http://www.bensage.com http://www.oxfordcountyhomes.ca Re/Max a-b Realty Ltd., Brokerage. 519-536-7535. 521 Dundas St., Woodstock, ON