Flashback: it’s sometime between November 2020 and February 2022, pick a month, any month, and guess what is happening? Yes, that’s right, we are stuck in doors with masks on our faces, you can’t enjoy your favourite outdoor activity for some arbitrary reason and you haven’t seen your family face to face in a substantial amount of time. Oh that’s not the answer we were looking for? Sorry.
The correct answer: you’re a would be home buyer somewhere in Ontario, let’s call it London for arguments sake, and you just got smoked in competition for that cute 3 bed house in Byron that you just KNEW was going to be your home. There were 23 offers, and the house that was listed at 689,900 sold for 777,100 and you lost by about 50k. Frustration and despair sets in, your partner is desolate as you go to sleep with 5 other houses to look at sometime later this week.
Doesn’t that sound fun?!??!?! Maybe not, but that was the housing market we lived in. Suffice it to say, for every one home buyer that was successful in one of these scenarios, there were scores of other dejected home buyers that either gave up or persevered until they were the one that beat out the angry mob.
Multiple offers, bidding wars, over list sales, etc etc that was the norm for one of the craziest real estate markets that the world has ever seen. Yes, the world. There was a lot of frustration and emotional baggage created during this time span, but there were a lot of transactions happening. It was a very efficient market to transact in for one simple reason: you knew that your house would sell, almost no matter what, and often for more than you dreamed of. And with that confidence, all types of home buyers were ready to attack the active listing pool and compete in multiple offers.
There were quite a few of those same would be buyers that decided “this isn’t for me” or “I refuse to bow down to these greedy sellers” or “I will wait until I can buy the house I want, without competing, with all the conditions I desire and while getting an amazing deal”. Well guess what happened?
Rejoice, the market has “shifted”!!!! Those same would be buyers that shunned the multiple offer scenarios of yesteryear got their wish and you can now (in most cases) find a home you like, negotiate one on one with a seller, and get an offer accepted, under list price, and with conditions. The holy trifecta of a “buyer’s market”. And I say buyer‘s market in quotations because our local market statistics still suggest that we are in a (softer) seller’s market.
Why am I highlighting the dramatic shift in market dynamics over the past couple of years. Well, it’s because of a few stories that I have heard within the real estate community as of late that I think this storytelling exercise is worth going through. And it is: the return of multiple offers… Or the NEW multiple offers. You can choose whichever catch phrase feels best to you.
Yes, multiple offers on a single property are occurring in our market again and it is happening more often as we get into the 2023 spring market. These multiple offers are very different than the multiple offers I mentioned at the beginning of this entry in a couple major ways, all of which make things more confusing than what we experienced in the past.
As I said before, the crazy market we lived through over the past few years was very efficient and easy to navigate. There was an essential playbook for success, that if followed correctly, would allow you to buy a new house, sell your house and go on living your life perfectly happy, just in a new house. The recipe for success was this: you establish a base line for your homes worth, a safe selling floor that you could count on achieving as a basis for establishing a budget for your new home. Ie: if I sell my house for 500,000 I can afford to offer 750,000 on a new home because of my down payment, financing, monthly expenses, spreadsheet, math and whatnot.
Then, you go look at houses that should sell within your budget. Not those that are listed within your budget, but would sell in multiple offers, over list price and still fall within your budget. You do this by finding neighborhoods where previous sales fall in line with your budget, ignore list prices, they mean nothing.
Next, you wait until offer night and submit a firm offer (no conditions) at a price that falls in line with similar recent sales, perhaps a bit higher than the best comparable and you cross your fingers.
If your offer is accepted, congrats, time to get your house on the market. Do it fast, get your marketing materials put together, hit the market on a weekday, hold some open houses and then review the slew of offers that are presented to you in 6-7 days from your list date, and pick the best one.
Again, congrats, you sold your house for a boatload of cash and you can coast until the closing date of both properties and then move.
***This is an overly simplified version of this process that is often much more complicated and emotional than I have written it out to be, but this was a typical scenario that a lot of people went through one way or another.***
Now what are the differences in the market from then to now? It starts (and almost ends) here: you don’t know if your house is going to sell within a certain time period, and for how much. That throws a major wrench into the plan and makes it difficult to even decide where to start the process of buying and selling a house.
The reality is that most homes are being sold conditionally in this market (much to everyone’s delight) and that isn’t changing even in a multiple offer scenario. Well priced, attractive homes are still sometimes able to attract multiple offers, often without even trying. To me, this underscores the current market quite well. There are buyers out there, but there aren’t that many quality listings hitting the market these days at the right price. So for those that fit the aforementioned criteria, they are getting quite a bit of interest.
Multiple offers so far in 2023 are resulting in homes still selling conditional on financing or a home inspection, or both and often under list price as well. This phenomenon is a far cry from what we were seeing just last year. And it’s just creating even more confusion.
How do you submit an offer in this market if you are competing against one or more buyers? Do you offer list price? Under? Probably not over. What about conditions? Will they accept an offer that includes a home inspection condition? It’s tough to know where to go without a lot of supporting evidence from similar situations that have already played out. The other thing to consider about a home that sells conditionally: the sale price takes at least a week to appear on MLS. That data is pretty important to us Realtors that are hoping for some supporting information when we advise our clients. It’s slow and inefficient, but these are the new rules of the game.
For now, any buyer that is looking to buy a house and ends up competing with other buyers needs to put make a firm and confident decision with their offer, and stick to it. If you have put your best foot forward, and the home sells to somebody else, you need to be alright with that and move onto the next house. The question of “what is it worth to me?” and “how much risk am I willing to accept?” have never had so much weight behind them.
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