Remember Junior, the Italian mama’s boy with the hots for an eight-hundred-thousand bung? As I told you yesterday, the $649,000 Toronto beater house turned into an $810,000 sale after 13 competing bids were tabled. (Junior lost.)
Or were there?
Bidding wars are back, at least in the GTA and YVR (while markets like Calgary and Halifax spiral into despair), and buyers absolutely loath them. No wonder. Unlike in Australia, where blokes stand around and make verbal offers to buy a property – transparent and thrilling to everyone present – multiple offers in Canada are one of realtors’ dirty little secrets.
If you compete for a property, you’re blind to the process with no recourse but to believe what an agent tells you. The guy with the listing might say nine registered offers are coming and they’re all for more than the sellers are asking, prompting you to offer a massive premium. But you never know. There could be three low-ballers. There could be none. And you’ll never see what those offers contained in terms of price or conditions. All that’s revealed is the winning amount.
In one famous case a woman was informed a listing would be hotly contested. So, she upped the offer by tens of thousands. It later turned out hers was the only one (accepted, of course). She sued.
Phantom offers undoubtedly happen. It’s just one of the sleazier tactics used to inflate prices and commissions at a time when inventory may be low, and mortgage rates lower. Another slimy strategy is to list a property vastly below market value, prompting hysteria and dyspepsia among the virgins, and purposefully creating a feeding frenzy of offers.
Remember the North Toronto unrenovated pile that went for 195% of the listing price last April, after 72 offers hit the kitchen table? Sure ya do. And the buyer who ‘won’ was a client of the listing agent – the dude who orchestrated the whole thing. Hey, that seemed fair.
Well, something may be about to happen to curtail these orchestrated slugfests. The real estate regulator in Ontario, known as RECO, is hot to slap down cheaty realtors who manufacture phantom offers. Soon agents will have to keep records of all the bids on a property (for at least a year), and be prevented from claiming there are competing offers unless they actually exist and have been registered. Failure to do so will bring deregistration – which means you have to give the Audi back.
Unclear is whether a jilted bidder can petition to see the other, competing offers. But don’t hold your breath. This is still a process stacked in favour of the seller and their omnipotent agent. And RECO (like real estate regulators across the country) is an under-staffed and complaints-driven outfit. They have no roving realtor cops to police the 108,706 people flogging houses.
The best advice? Don’t go into a multiple-offer situation. Establish what you can offer and still have a financial life. Make your first offer the best (if competition looms). Always get pre-approved for a mortgage. In writing. Engage a realtor to represent you instead of dealing only with the listing agent. Don’t sign a BRA. If you’re forced into it, make the BRA specific only for the property being sought. On the day you offer, wear your special underwear backwards or whatever it is you do to find private joy. This is a not a fun process.
It’s also a process destined to get more bizarre and stressful before we’re done and this gasbag of a housing market pizzles. For that you can thank mortgage rates and our dithering central bank. Head guy Stephen Poloz ‘s latest media encounter actually opened the door to no rate drop on April 15th.
He downplayed the oil collapse, put more faith in a manufacturing rebound and suggested the poodles may wait until the middle of the year to reassess rates. Observed Capital Economics’ David Madani: “The speech earlier today by Bank of Canada Governor Stephen Poloz and his remarks during the press release shortly afterwards suggest that the Bank isn’t in any hurry to cut rates further. Accordingly, the odds of another rate cut coming in April are lower than we previously thought, though we still wouldn’t rule it out completely.”
In response, the Canadian dollar rallied a little, even as poor Alberta was bringing in a budget drenched in red ink (a $5 billion deficit). Thus, the Bank of Canada has done it again. It surprised markets in January with an unexpected and unannounced rate plop, killing the dollar. And it looks like the stage is being set for another surprise. Maybe April 15th. Perhaps May 17th. Or it could be July 15th. Or never.
You know what that means, kids. Buy now, or buy never. Hurry.
Finally remember that little tussle I reported having a couple of weeks back with Condo King and Omnivore Brad Lamb, plus mortgage-broker economist and former bank star Sherry Cooper? The media event has now been published, and you can read a version here. I had a quick read and came to the conclusion Mr. Lamb stole the audio tapes, secretly altered them, and had an irresistible, creamy, raven-haired realtress drop them in the editor’s worn briefcase during a tryst they engineered. But that’s just a working theory. Or, they don’t type well.