You mean I might have to actually try to price my property before I list it?
Things are a little wonky out there right now. Wonky is the word I use whenever I can't really find the word to describe something, like "man, this fish tastes wonky" or "it's really wonky that this condo is still listed at $479k when it should have sold for $525k by now". It's been wonky for a couple weeks now and I think it's going to stay this way until agents, sellers, and buyers start adapting to this new market we are slowly trying to transition into.
Here's what I mean:
Anyone who has been even slightly interested in the market in 2017 knows how the game works. A seller has a condo (or house) he wants to sell, he hires an agent, they discuss "strategy", which up until today has been the following:
"The last sale was $475k. So we'll list at $399k, get a bidding war, and see what it sells for. Sound good?"
"The last sale was $500k. So we'll list at $399k, get a bidding war, and see what it sells for. Sound good?"
"The last sale was $525k. So we'll list at $399k, get a bidding war, and see what it sells for. Sound good?"
Notice the pattern? It took very little skill to list a property earlier this year because, well, listing agents didn't have to worry about actually pricing units. The biggest fear most sellers and their agents have when listing properties is leaving money on the table. "What if we list for $500k and get an offer for $500k on Day 1? Should we have listed $520k? Could we have gotten more by pricing low and sparking a bidding war?" Until today, this wasn't something sellers needed to worry about. You could almost pick a number out of a hat and as long as it was low enough, you didn't have to worry about under-pricing because you were almost guaranteed a bidding war.
Now, this is what we're seeing more and more of:
"Listed for $499k, offers reviewed May 15th at 7pm"
"Listed for $499k, offers reviewed May 15th at 7pm" (no offers or seller refused to accept any)
"Listed for $499k, offers reviewed May 15th at 7pm" (seller and listing agent holding out for a miracle offer).
"Listing terminated. Now listed for $599k, offers anytime"
Why do sellers dread this? Because now they have to show their hand. Imagine having to list your property for what you would actually sell it for? Novel idea, huh? We haven't seen that happen for a while. Why do listing agents dread this? Because now they actually have to price a property based on current market conditions. If you aren't in the market every day, this is where many inexperienced agents squirm. And this is why we continue to see units positioned for bidding wars when, in my opinion, the market is saying "we've had enough of that game. So we'll wait".
What's worse? Some listings are keeping their original list price well after the unit doesn't sell on offer night ($499k in my example above). That seems great until you realize that the seller has no intention of actually selling for $499k. This is one of the most frustrating things when having to deal with a listing agent who likes to play games - you see a unit listed for $X and when you try to offer $X, the listing agent says "that's not what we're looking for". I often feel like there is unnecessary adversity between agents, rather than cooperation to make sure both sides of a deal are fairly represented (which is the whole point of the MLS system to begin with). Instead, it feels like we're trying to mess with each other's heads and drive our clients crazy at the same time. Doesn't seem right to me but I won't go on a rant about that right now.
In any event, as long as we are still firmly in a seller's market, I'm sure we'll see more of these games but buyers are quickly getting wise to the situation and holding out. Not because they expect prices to fall or demand to slow down. But I think it's because they want sellers to start playing fairly. "Tell us what you want and we'll let you know if that's what we're willing to pay". That seems to be the new trend these days, which is slowly shifting the power from the seller to the buyer, and forcing listing agents to stay on top of the market daily. And if everyone starts playing fairly, maybe, just maybe, this wonky market we're in will be a fun place to play again.
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Your Toronto condo lover,