We’ve all experienced a neighbors’ house selling on our street. For the week it’s on the market, it feels like there’s perpetually 20 cars parked outside, and on offer night 10 cars line the streets and block the driveways in a disorganised chaos for 6 hours.

why do agents price homes for bidding wars?

If there are more buyers in a neighbourhood than homes for sale, chances are your agent will suggest a “Marketing Price” and to hold out on offers for 5-7 days. That is far from an insufficient amount of time though. It’s enough time for serious buyers to preview the home, for the agent to host an open house, and for buyers to make a decision on whether or not to put in a bid. The short timeline creates a sense of scarcity, and buyers react because they don’t want to lose out.

How much below market value should you price your home for competing offers?

Every community is different and you should have a marketing plan tailored specifically to the marketing YOUR home. No one marketing plan can work for every home in every community. For example, in Joshua Creek (Oakville), homes sell for 106.8% over the asking price on average. However, in Lorne Park (Mississauga) the average home sells for 121.7% over the asking price!(April 2017 stats). It’s not that agents in Mississauga are better than agents in Oakville. Agents and buyers have an expectation that homes in Lorne Park are priced 20% under market value, and that homes in Joshua Creek are priced 6% under market value.

The market is always changing. At the beginning of the year, we saw many bidding wars, but now the market is more tame. Some homes are still selling in bidding wars. But more sellers are listing their homes at market value. (July 2017)

is there danger if the marketing price method backfires?

The danger comes when an agent unfamiliar with the neighbourhood applies their “guaranteed marketing plan to sell your home in 21 days or they will buy it” (we all know one of these Realtors). As I previously mentioned, certain neighbourhoods sell for 6% over asking, while others sell for 20% over asking. If you price a home in a neighbourhood where the average home sells for 6% over asking, but you price it 20% below market value, you will be leaving money on the table. The buyers and agents working in that market are accustomed to homes selling for 6% over asking, and they will not compensate for your mistake.

We’ve determined that the best way to reach a good sale price is by:

• Pricing the home to appeal to qualified buyers who know the local market.
• Creating a fair bidding situation and a level playing field for all buyers.
• Using professional photography and multimedia to showcase the homes’ best features.
• Setting the stage for how offers will be presented and accepted on offer night.

The final point is one of the most important, and most commonly overlooked. Buyers and Buyers’ agents are anxious on offer night, and telling them to arrive at 6pm and making them wait till 8 to present is unfair and frustrating. We schedule our offers and give buyers a specific time slot to present, this way we are already building a good rapport.

The Lourantos Group Way

We’ve had a great reception from agents when we host the bidding war at our office. It gives agents the tools they need to adjust their offers. It also gives buyers the chance to have dinner in a nearby restaurant or go shopping to pass the time. The sales experience is enhanced and the final sales price might even be higher. We have the staff required to keep the offers in line, we give the agents a specific time slot to present in, and we give them access to a fully functioning office so they can adjust their offer.