Five things we learned about Toronto’s real estate bidding wars from the Globe and Mail
Some basic math: one hot Toronto housing market plus several banks offering historically low mortgage rates equals some seriously ludicrous bidding wars (case in point: the Willowdale bungalow that sold for $1.2 million earlier this month—$421,800 over the asking price). A recent Globe and Mail feature delved into Toronto’s bidding battles, sharing nightmarish tales from homebuyers and a few words of caution from experts. Here, our top five highlights.
1. Crafty realtors are using psychological tricks to start bidding wars
Underpricing properties to ignite bidding wars is a winning tactic. Low prices create “auction fever where more bids result in it being bid up higher than what it might have been had it started at a higher price to begin with,” according to one business psychology professor.
2. Toronto attracts foreign buyers with lots of money—and they’re spending it
The story contains a few striking illustrations of how foreign buyers are fuelling the market. The woman who paid $421,800 more than asking for that Willowdale bungalow was originally from China, as was a buyer who paid $1.4-million for a Don Mills unit listed at $1.25-million. An agent with Harvey Kalles said she’s sold more than a dozen suites in one shot to her foreign clients.
3. Desperate would-be buyers are breaking the rules of home-buying etiquette
When agents were submitting offers for one Mississauga townhouse, one determined buyer showed up in person to plead her case. At least that house was for sale, though—a couple who have been looking since Christmas have started handing out letters at any attractive houses they pass by, asking if owners would consider selling.
4. The school year is behind the springtime sales boost
The warmer weather isn’t the only reason the housing market heats up in the spring. House sales peak in March and April because families who buy now can move over the summer, meaning kids won’t be changing schools mid-year.
5. Banks are offering up more money than buyers are asking for
Economists argue that low interest rates are encouraging people to overextend themselves, but the banks, apparently, are doing their share of prodding. “I go to the bank to get preapproved for a mortgage,” said a buyer, who ended up staying put.”I’m thinking a maximum $600,000 mortgage, and the bank is telling me ‘why so little? Why don’t you go to a $900,000 or $1-million mortgage?’”
•Why bad bidding wars happen to good people [Globe and Mail]
Link to the Globe story is broken.
@teedot
Of course it will teedot. *pat *pat
Most of the things we can learn leads back to point #1 – Realtors and trust me… CRAFTY is NOT the word to describe them.
It is so not fair how the market is right now, my husband and I were trying to buy a house for the past 2 years, after 5 tries and unfair bidding process we just gave up!!!!
Not looking to buy until the system changes, buyers are getting so fed-up where trust no longer exists.
=(
The system is broken!!!! We as buyers can not trust Realtors at all. They should be there for you, looking for your best INSTEAD, they are making things up regarding bidders. Watch out for your self, don’t thing they want to help you, they are not your friend, “it is all about money” the more money they can pocket the better for them. Just look around, how much money they are making forcing you to get a bigger mortgage! Please remember, at the end, YOU are the one paying for everything…. Buyers don’t get help from bankers, off course not, the more you borrow, regardless the low interest, you are still paying much more that you should by Realtors overpricing the houses. Just think about it!!!