Real estate bidding wars
Making an offer on a house is always a bit nerve-racking. But there’s nothing quite like that sinking feeling when your realtor comes back with the bad news that there’s another offer on the table.
It’s a feeling that a growing number of West Island buyers are experiencing at the negotiating table. Daniel Dagenais, a real estate broker on the board of directors of the Greater Montreal Real Estate Board, said the West Island has seen a significant jump in multiple-offer transactions in the last six months.
Most buyers offer at or slightly below asking, said Dagenais, so when homes sell above asking, it usually indicates a bidding war.
Overall, on the island of Montreal, the percentage of homes selling above asking jumped from seven per cent of all transactions between Sept. 2016 to Feb. 2017 to 16 per cent this year. But in some parts of the West Island, a quarter to a third of homes sold over asking.
Based on data provided by the real estate board, in PointeClaire, the number of homes selling above asking jumped from 17 to 32 per cent as compared to the same six-month period last year. Beaconsfield went from 11 to 25 per cent, and in Dollard-des- Ormeaux, it increased from six to 23 per cent. In Kirkland, it tripled, from seven per cent to 29.
Dagenais said one reason for the spike in multiple offers could be that buyers are reacting to recent increases in interest rates, aiming to lock into today’s still historically low mortgage rates before they go up further.
“People are often late to react to things. We had three increases in interest rates last year from the central bank,” he said. “We were saying for years that interest rates would go up, and now people are seeing it.”
Dagenais said the best thing buyers can do is work with a realtor who is a skilled negotiator, put their best offer forward from the beginning, and accept the loss if they are outbid.
I’ve been on both sides of a multiple buyer situation. As a buyer, the most important thing you can do is be firm about your walk-away point, and stick to it. We did, and it turned out the “other” offer was about as firm as the snow pack in April, and we ended up getting the house anyway.
As a seller, I’ve been on the flip side. One of the offers was a killer deal well above asking, but it turned out we were the buyer’s backup plan. The subjects were never removed, and the offer evaporated. We ended up with the lower, but firmer, offer.
In other words, when in a multiple offer situation: Buyers: don’t panic. Sellers: don’t get greedy.