Multiple Offer Mayhem!!! May 29, 2007 The spring market has been in full swing since January/2007. With interest rates still quite low, and amortization periods being stretched to almost 40 years now, everyone is in condo/loft heat!! Many of you are experiencing it yourselves. For those of you who are lucky enough to find that perfect little place, it is no longer the case of negotiated price or terms with the seller. It is cross your fingers and take what you can get! I have been working with some buyers for a few months now, and we keep encountering multiple offers every where we go. Listings indicating "Offers to be accepted on such a date at such a time", spell doom for most Buyer’s out there who can’t help but get emotionally attached to a place the fall in love with. Only to be faced with the decision to bid sometimes $20-50,000 more than asking. I am faced with the same? time and time again, and I wish I could offer a better answer then "better luck next time" or "I guess it wasn’t meant to be". The truth is, there are no rules to govern such a situation, try telling that to a Buyer who gets frustrated at you when they lost a place to someone who has offered $20,000 more than them in an offer. Well, here is the trick to a multiple offer, and sometimes it works and sometimes it doesn’t. Be prepared in cases like this, to be asked to remove your financing condition. This condition is put in place to protect you, in the off chance that your financing (for some reason) has not yet been secured by your Mortgage Broker/Lender, this is your out with no penalty. Be sure that before you entertain getting into this market, that you obtain an approval from your bank/lender, and get this in writing. Also, be sure to ask them if the situation were to arise, would you be in a position to remove the financing condition. Think of it from the seller’s perspective for a moment. If you have 2 or more offers in front of you and the offering price are fairly close, it now becomes a case of the terms/conditions of the Offer. Such as; amount of deposit, closing date and conditions (escape clauses). Having a financing condition in an agreement (from the perspective of the seller), says to them that you may or may not be able to afford this property. You would be tying up the place, for up to 7 banking days and then potentially not being able to go forward with the deal. In the meantime, more offers could have potentially come in and they could have had the place sold firm!! Then there is price, and be prepared to pay more than asking if there are over 3 or more offers on the table, because they all want this place as much as you. How much over, now that is something you have to be able to swallow in some cases. Your agent should never try and push you beyond the limit that you can afford, and what the present market indicates. As hard as it is to remain level headed in a situation like this, remember to try and not to get emotionally attached before the deal is done! Linda Wheeler linda@simplycondos.com

<< Reply to this article: From: Ari B. Sent: Tuesday, July 24, 2007 10:31 AM To: 'linda@simplycondos.com ' Subject: Multiple Offer Mayhem Hi Linda, I read your article "Multiple Offer Mayhem!!!" on simplycondos.com, and immediately identified with the situation you described. I am, unfortunately, experienced with multiple-offer scenarios, and have been on the losing end of one on several occasions. Believe me when I say that removing an offer's financing conditions is not sufficient enticement when another prospective buyer offers $90,000 more than you did. I'm hoping that you'll indulge me for a few moments as I lay out my thoughts on multiple offer scenarios and the general practice of withholding offers. My saga begins this past May with a wonderful little house on Davenport, between Bathurst and Christie. Although I am principally in the market for a condo, I stumbled across this little gem and could not resist going to view it. The house had been completely and meticulously renovated, both inside and out, and appeared to be plucked directly from the pages of "Architectural Digest". The owner had obviously paid attention to every last detail, and I lost count of the many high-quality and custom finishes throughout the property. From the "lofty" open-concept feel of the place, to the wrought-iron staircase, to the spa-like bathroom – this house truly felt like home to me from the moment I walked through the front door. It was at that moment that I broke the cardinal rule of home-shopping: I became attached to the property, and began to envision myself living in it. Now, it wasn't as if this home was without fault – the house was small, had street parking only, a single washroom, an unfinished (check that, unfinishable) basement, and a second bedroom with no closet – but the home's pros vastly outweighed its cons (or so insisted my left brain). My rational mind tried to remind me that such a beautifully renovated home, in combination with the reasonable asking price, was sure to attract a higher than usual number of offers, but my imagination refused to hear of it. Sure enough, come offer day, my agent and I – along with the agents representing 11 other bidders – found ourselves shoehorned into diminutive waiting room of the selling agent's realty office. The house sold for $121,000 above asking price. I was outbid by (the aforementioned) $90,000. I had been on the losing end of a bidding war in the past, and have been twice since, but this one really stung. It got me thinking about the state of the Toronto housing market in general and multiple offer scenarios in particular. I understand that I am writing from a buyer's point of view, but I truly believe that there should be a difference (perhaps a legislated difference) between a "house for sale" and a "house auction." The point is that if the home on Davenport had been listed for, say, $100,000 more that it was, I would've looked at it, said "beautiful house, but out of my price range," and that would've been it. With its low listing price, however, I got my hopes up and really only ended up wasting both my agent's time and mine. If a home is for sale, I believe that it should be legislated that it cannot be sold for more that 10% above the listing price. This isn't a novel idea – other jurisdictions in North America have laws governing home auctions. And although I know that 10% doesn't sound like a lot, consider this – on a $500,000 list price, 10% still allows for $50,000 of upward leeway. Furthermore, all of this isn't to say that a home cannot be put up for auction, but simply that it should be less ambiguous when this is the case. If the listing price is in fact not the asking price and rather only the starting bid, that fact should be clear to all parties interested in the property. As it is now, not only is the increasingly common practice of listing a property below its estimated market value and then "withholding offers" in fact an invitation to a home auction, it is also a "blind auction": one is being asked to bid on a property without any insight into the competing bids, or even the number of bidders. Not only is this a patently unfair practice, it is also an excruciatingly frustrating experience for those of us without bottomless pockets. An open auction would provide a more level playing field for all interested parties, and (in may cases) may even result in a higher sale prices for sellers. ____________________________________ Ari B. Senior Consultant, Data Centre Integration