Monday 1 June 2015

Buyers, beware under-priced properties seeking heated bidding wars

A combination of strong demand and low listing inventory has made the market a tough place for buyers right now.  But it shouldn't scare you as long as you keep your wits.

While it is not a large percentage of listings, there are getting to be more sellers in Hamilton willing to play the market and list below market value to generate a lot of interest in a short time, often resulting in competing offers - "bidding wars" in the layperson's vernacular.

This can result in a property going for more than even the listing agent is expecting, [like a house that sold on Grant Ave not long ago], listed at $200,000 but selling at $300,000  The listing agent is quoted in the news report as saying he was expecting something more like $230,000!

But even if the sale price does not go above what it should be (ie. fair market value), there is much more likely to be a firm offer if you get several competing offers from different buyers.

I've actually seen a property recently that I had done a price evaluation for and suggested a sale price around $240,000 should be expected.  For whatever reason, they chose to go with another agent and listed at $219,900.  The property sold firm in three days at $241,000.  Pretty much what I had expected.  So while the property sold "20,000 over list price", it's hardly a point to boast on.

While this "sure-thing" sale might be helpful in getting you moving forward with a sure budget on your next purchase, I have mixed feelings on these quick firm sales with no proper home inspection done by the buyer, which I will explain in a separate entry in the next few days.

As a buyer, this makes it even more important to work with a good real estate professional who you trust to give you solid advice on property pricing - in terms of both character and competence. Someone may get worked up in a multi-offer situation and offer more then they should with no conditions... but as I always say, just because someone might that doesn't mean it should be you.

If nothing else, then if you do choose to make an aggressive offer on a property you really like, it should at least be an informed decision.

If you'd like to talk more about the home-buying process and explore the current market in Hamilton, give me a call or email and let's talk.

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