Houses have been selling for several tens of thousands of dollars more over listing price this year, and as much as realtors say the market is softening, it won’t be “soft” any time soon.
It’s become the norm to have up to a dozen offers on every home, often without conditions and almost always over the asking price.
And this is in Sooke, never mind Victoria or the fast-growing West Shore.
“There used to be an opportunity to negotiate. There’s no negotiation now,” said Tammi Dimock, who’s been a realtor for more than 30 years.
Seeing houses sell for $30,000 to $100,000 over the list price is standard now, she said.
Pressure from buyers scrambling over limited inventory is leading to more aggressive bids. Not only are bids coming in higher and often without conditions, but some people are making what’s called a referential bid. It’s kind of like retail store price matching, except it’s the buyer promising to pay $5,000 or more than the highest bid.
There are also bully offers that come in ahead of the deadline at an inflated price with no conditions. Try looking at that money in the face and turning it down.
Listing realtors, who are duty-bound to get the highest price for their client, often drum up interest before properties are listed. That’s called a delayed sale, and it’s working well for Sooke realtor Oliver Katz.
He’ll post the house with elegant imagery, drone videos and 3D tours to Facebook a few days before listing it. When the official listing opens, the bids coming in are often from people who have already interacted with the social media post.
Katz listed three houses on May 14, and all of them were sold three days later, one with conditions, but all were over the asking price. One sold to a bully offer for $60,000 more than was asked.
“It’s insane. I’ve never seen this before,” said Katz, referring not only to the prices but the speed at which houses are snapped up.
The urgency is stressful for homebuyers, putting in between five and 10 offers on different houses before one’s accepted. It can lead to people borrowing more than they intended or putting in unconditional offers — that is, with no chance to get a home inspection or make sure the mortgage goes through.
And realtors are working harder than ever before but often aren’t making much more. Writing five to 10 offers per buying client, and only one of those generates income. And with bully offers, they’re always on call.
Recently, Dimock had a rare morning off and was reading a book when she got an urgent call: “A bully offer’s coming in. If your clients want in, I need your offer by 11 a.m.”
She leapt out of bed to write the offer that wasn’t supposed to be due for three days and raced out to get signatures. The same thing happened twice that day, and neither bid was accepted.
This graph shows Victoria home sale prices rising over 10 years. The numbers aren’t corrected for inflation, but the increase in unmistakable. The datum is combined prices of condos, townhouses and detached houses. (Canadian Real Estate Association graph)
Part of the challenge is low inventory, as realtors quaintly refer to the largest purchase in most people’s lives. Even though it’s a seller’s market, sellers are usually buyers too.
“Sellers are afraid. They’re saying, ‘Yeah, I can sell, but can I find a home?’ ” Katz said.
The confluence of low inventory and cheap money – low-interest dead rates and a vast wealth transfer from boomers to their children – have driven the market, and on top of it, the pandemic has increased the demand for larger homes.
“Homes have become not just homes but school, office and recreation space. People wanted more from their home,” said Brendon Ogmundsom, B.C. Real Estate Association’s chief economist.
He predicts the market will soften to the point that “we won’t see record month after record month,” but make no mistake, the real estate market will stay strong.
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