You’ve probably heard about what’s been happening here in the Ottawa area for the past few months: A record-breaking 2020, bidding wars and bully offers. Just in the last week, there were 15 offers on a townhouse in Kanata and it sold for $140,000 above the asking price.
So what’s going on? Why did that house sell over the asking price?
1. Ottawa has a supply problem.
From Carleton Place to Orleans, there aren’t very many homes on the market at the moment. It’s slim pickings out there. Right now in Barrhaven, there are only 9 townhomes for sale. 9! Sellers are sitting on the sidelines, waiting for the spring market. Or they’re waiting to find their next home before putting up their current home on the market. It’s the circle of hell.
2. Sometimes, houses are EXTREMELY under-priced. They’re listed drastically below any comparable sales and listed below what is expected for the neighbourhood. This gives false hope to those buyers who are throwing their hat in the ring “just in case”, which in turn, is driving the price up.
3. Buyers are getting bad advice. Because homes are being offered at extremely how prices, this brings in a ton of buyers, some who wouldn’t be able to afford what it’s actually worth. The increased number of offers creates a frenzy among those who can actually afford the house and the price gets driven up. The winning bid is the person with deeper pockets.
Agents need to have a conversation with their buyers about what is realistic. Just remember that if you’re winning the bidding war that can’t be justified by recent sales, you may have a problem with getting financing. The lenders are asking for appraisals to be done in most cases. If they feel you’ve paid too much, you risk not getting the mortgage for the full amount.
4. Buyer motivation
Sometimes you just can’t compete with someone else’s motivation. The sale price may defy all logic. Maybe the buyer needs to find a house right away because they’ve already sold their home. Maybe the buyer needs to stay in their child’s school district. Maybe they’ve lost out 8 homes and are tired of competing. In the end, you need to know your limits and stick to your own plan.
Looking for a house? Want to be the winning bid? Let’s chat!
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