2697 replies to this topic

[MarkoJ]

We will never know the other bids. So we don’t know if your advice was better than their Realtor’s. All we know is that they “won”. All other bids remain secret. For all anybody knows, their bid might have been 10% higher than anyone else. So they maybe “overpaid” by $100,000. We will never know.

 

Spring of 2016. There is a home listed in Saanich for $899,000. Two offers including my clients. My clients offered $935,000 and we see the property pending (sold) a couple of days later for $1,105,000. The other party incorrectly guessed my clients were bidding around $1.1 and overpaid by $170k.

 

On my listings I've had a number of situations in the last 24 months where the winning bid is 100k, or more, above the second highest bid. 

 

You are correct in that the bids are kept confidential, we don't release them and why would we. A lot of buyers would be very upset by the amount they overpaid. Usually you call back the winning offer agent and say something like "my clients absolutely loved your clients letter, congratulations." You aren't going to tell them that they way overpaid. 

[lanforod]

This is why there are calls for a change to blind bidding. If there were any single practice that could immediately lower prices it's open bidding only.

[Szeven]

I find the disconnect between buyers and sellers stories of how their transactions went in the last few years to be extremely comical.  I have a couple anecdotes from friends who sold places who tell the story of getting one bid 5-10% above all other bids. But, their purchase story is suspiciously different. Yes, they outbid others by paying 10%+ over ask, but they just barely outbid the other bidders.... haha. Are you sure?

[Mike K.]

Sounds like we have a lot of unethical agents.

I think we all know what a dumb price is, right? It’s the guy listing what we ‘know’ is an $800k house for $1M, in this market. I’m sure it has a lot to do with hope and the belief their place is special, but man.

There’s a place recently listed for $1.5M on the peninsula. A friend bid on it, but bid way, way less, with the agent telling the seller’s agent there is no reason for this listing to be so high, but it makes sense down over where they offered (around a million). The agent said too bad, so sad.

Eventually in swoops a $300,000 price drop! And still no bites, so in my friend goes again with an offer. Nope. Sorry. The buyer’s agent asks if the seller wants to sell or is just wasting everyone’s time. The agent says the listing is special. Etc. And it’s coming up on 60 days on the market.

What goes through someone’s mind to list that stupid high and frustrate people -away- from their listing? They do themselves zero favours.

[lanforod]

Maybe we should do away with listing any asking price altogether. Open bidding only, reasonable min start, no maxes. 

[Nparker]

Isn't that how real estate is sold in Australia?

[Mike K.]

Hey, if you’re selling, it’s up to you to tell the buyer what you want, not for the buyer to go fishing. You know the house inside out, perks and benefits of the property, etc. But you can’t treat the process like a tourist trinket shop that prices everything stupid high hoping for a sucker.

Every day homes are listed that you shake your head at, and wonder what on earth they are thinking? One recently came up for sale near my mum’s place. It crazily over-priced, even for the late 2021 market!! It’s coming up on one month now, and it’ll be there a month from now unless they get real.

[Barrrister]

Or unless it sells for that price  Mike. Hard to tell these days since most everything seems to be priced a bit crazy.

[Mike K.]

It won’t, believe me.

If you think it will, have I got a heap of real-estate for you!

[Szeven]

Mike I think you are overlooking the emotion of being homeless (in between selling and purchasing), and a mortgage rate guarantee burning a hole in your pocket. In 2021 there wasn't time to be reasonable and people made mistakes.

[Mike K.]

Yes, in 2021 for sure. But this is a very different market.

What you could ask in a market with 2% mortgages and what you can ask in a market with 6% mortgages is a world apart. Too many realtors are allowing their clients to pretend it’s still May, 2021.

[Mike K.]

Which takes me back to my rant about pricing a home right. You have to be realistic for the market today. I think the place my friends just bought would have been priced 15% higher in 2021, and at the time few would have argued it was unreasonable because the numbers worked.

So my friends bought a place that has at least 10% upside just if rates start to slide. That’s a fair deal, IMO.

[dasmo]

At todays prices a realtor only needs a few sales to make bank. There will be a tendency to just tell a client what they want to hear simply to get the listing. 

[Mike K.]

Every day homes are listed that you shake your head at, and wonder what on earth they are thinking? One recently came up for sale near my mum’s place. It crazily over-priced, even for the late 2021 market!! It’s coming up on one month now, and it’ll be there a month from now unless they get real.

Price just dropped 3.5%.

It’s going to grind slowly down, and likely to get pulled in 90-days unless they drop another 15%. I can’t imagine that’s good for morale, though.

[Mike K.]

Oh, update!

The home in the peninsula that I was talking about, that wanted $1.5 million? It just sold for $1.0x something. About $450,000 below the initial asking price.

What a waste of time.

[MarkoJ]

I find the disconnect between buyers and sellers stories of how their transactions went in the last few years to be extremely comical.  I have a couple anecdotes from friends who sold places who tell the story of getting one bid 5-10% above all other bids. But, their purchase story is suspiciously different. Yes, they outbid others by paying 10%+ over ask, but they just barely outbid the other bidders.... haha. Are you sure?

 

My favorite is "the seller took less from us because of our letter" 

Edited by MarkoJ, 30 September 2022 - 12:13 AM.

[MarkoJ]

This is why there are calls for a change to blind bidding. If there were any single practice that could immediately lower prices it's open bidding only.

 

Prices wouldn't change whatsoever. The process and transparency of purchasing a home would improve but prices are dictated by supply and demand. 

 

Whatever reduction you would see in people overbidding would be offset by the emotion of people trying to outbid each other if they could see all the other bids. Net result would be zero. Just take a look at Australia, their market is also just as unaffordable. 

 

For example, when I have clients lose out homes by 10-20-30k they often say, "damn, if we knew we were only 25k off we would have bid that amount."

Edited by MarkoJ, 30 September 2022 - 12:24 AM.

[MarkoJ]

What you could ask in a market with 2% mortgages and what you can ask in a market with 6% mortgages is a world apart. Too many realtors are allowing their clients to pretend it’s still May, 2021.

 

Prices right now are actually higher than May 2021, fyi.

 

As an agent some overpriced properties I reject, some I take on. A lot of factors going into making such a decision, one of them being do I think the seller is going to drop the price during the course of the listing or not. Sometimes I read the situation as the seller will go through 2 or 3 realtors before they sell (re-listing at a lower price each time) and in the case I don't want to be the first agent, I would to be the 2nd or 3rd to list it. It is quite common in slower markets.

 

Sometimes you play the lottery that a buyer will overpay and that happens at a rate much greater than winning the lottery. 

 

This month we will finish with 400 sales and 2300 listings which means less than 1 in 5 sellers will sell. In 2011 we had 400 sales on 5000 listings so that is 1 in 12. Just a function of slower markets. 

[Mike K.]

I know! It’s bonkers!

That’s what I mean about pricing right. The numbers have to make sense given the high interest rates. The commercial side of the industry is pretty good about this, but residential has way too much emotion baked in.

[lanforod]

So why not ditch listing prices and blind bidding and let the market demand carry it all? Perhaps with some rules to alleviate the stress of auction processes.