A tale of property shopping gone weird

Miscellaneous and Personal Stuff I Must Share
1

So we’re casually looking for a condo to buy, the Toronto condo market is softening up quite a bit so we decided to start looking a few weeks ago.

We saw a place in our first outing that was nice but didn’t have the layout we wanted, the second bedroom didn’t have a window in it, it had glass doors which opened out into a solarium, the bedroom got light but no privacy, the condo fee was also pretty high since it was an older building. We continued looking unsuccessfully but always kept that one in the back of our minds. I had an idea that maybe the dining room could be converted to a bedroom and then we could keep the second bedroom as a third bedroom, bonus!

So we went back to look at it again, the owner was there when we viewed it which was a bit odd but she was willing to talk to us so we got some valuable info. Such as one of the same units on another floor converted the dining room to a bedroom and it turned out well, also that the windows in the building would be replaced this summer and would result in a special assessment of 10K (!)

The price was reasonable, so we decided to make an offer of the full asking price with a condition that they pay the special assessment. Our realtor thought it was a good offer which they would be pretty likely to accept, so we were pretty comfortable. The place had been on the market for about 3 months and they had just started listing the condo for lease also, so we thought they were probably getting desperate.

She presented the offer at around 7pm on Wednesday and we expected to hear back pretty soon, 10pm came and went and still no word. We learned the next day that the sellers realtor had been in touch with our realtor after 10pm asking her to justify the low offer, her response was “…the offer is the asking price…” the other realtor then proceeded to make clear that they price was low to try to incite a bidding war. The fact that he had a hope of an above asking price offer after 3 months made me question his expertise/sanity but whatever it’s up to the sellers to accept or refuse the offer.

The deadline of our offer was 6pm the next day and at around 5pm we learned that the husband would be home at 6pm and they would consider our offer then, no request of an extension they were happy to let our offer expire for some reason.

At about 8pm we got a call from our realtor, the sellers were countering our (expired) offer, our offer: $535K (note this was the asking price) their counter offer: $710K!
They had a few conditions of their own, that we pay the special assessment, and that we increase our deposit from $20K to $40K

Our response was naturally enough, thanks but no thanks. I’m still reeling over their response, a buyer offers the asking price and you counter with nearly 133% of the asking price? plus the complete WTF of asking us to increase our deposit, do they think we would walk away from $20K, and if we were crazy enough to do that that we wouldn’t walk away from $40K? Maybe they were scam artists just trying to steal our deposit…

This time yesterday I was looking forward to a new place, now I’m just bemused. Back to house hunting.

2

Possibly they deliberately gave a low asking price to get people in the door, who would then fall in love with the place and agree to pay more.

Or, maybe someone they know just sold their place (which isn’t nearly as good) for more than $535,000, so they have to get more. You know, so life is fair.

Hope you have better luck soon!

3

Well yeah, they must have thought they were pricing it low, but in this market it was a pretty reasonable price, there were other units in the building priced higher but they were way bigger.

I suppose they couldn’t reasonably relist it at a higher price, it would be pretty noticeable since there weren’t too many similar units in the neighborhood, but to think that we’d up our offer by 33% just because they asked, who has such a flexible budget?

It’s kinda sad to think about, they have bought a house and probably paid way too much for it thinking that they’d get a good price for the condo. If they manage to rent it out at the price they’re asking for (3.4K/month!) they’ll have an income source but no big down payment to offset their potentially huge mortgage. The rent would have a big bite taken out of it by condo fees as well, so not such a great income source either. But their lack of planning ain’t my issue, looking at a different place tomorrow, nearly 100K cheaper I could have dodged a bullet there.

4

When I sold my home a few years ago, I had a selling price and was up front that I would not consider a penny less. A couple looked and “fell in love”. They began looking into schools, and asked if there was any way to expedite closing so they could move in asap. All this before any financial stuff was discussed.

They made an offer, ten thousand less than my asking price. My real estate lady called, all excited about the offer. I gritted my teeth and told her that she shouldn’t bother calling, as I said I would not accept anything less than my asking price. She said I should make a counteroffer.

Which I did. Five thousand more than my original asking price. They freaked out. Seriously freaked out. Accused me of violating real estate laws. A week later I sold to someone else for my asking price.

5

I live in North York and there is certainly no shortage of people who are in denial about the value of their houses.

That’s funny that you offered them the asking price and they were disappointed there was no price war.

Which area of town is it in? $700K seems pretty steep for a condo in my neck of the woods.

6

The area is downtown TO at Bay/Wellesley. It’s technically Yorkville but the prices are actually way more reasonable than Yorkville proper. It’s a great neighborhood, we’re currently renting here, but the supply in the neighborhood is drying up so we’re going to have to start looking further afield.
It’s a bit crazy living in the same neighborhood as the sellers, what if I bump into them in the grocery store, should I ram them with my shopping cart?

I think the buyers in your case were a little wacky, but why didn’t you just counter for your asking price?

7

Many people are in denial about the value of their property.

A bidding war requires, uh, bidders. As in more than one. I’m sure your realtor pointed this out to their realtor, unless she expected you to bid against yourself, which is insane. Their realtor may have been using you as part of a reality check.

8

They were told my asking price was absolutely as low as I’d go. They then spent a lot of time asking me about the area, details on schools, etc. They discussed a bunch of different ideas they had to speed closing. When my (worthless) real-estate lady called with their offer I was kinda pissed.

Plus I was in no hurry to sell.:smiley:

9

Fair enough, I understand the sentiment. After the sellers let our offer expire before considering it my SO said if they accepted it we would refuse and offer a lower amount. We were in no hurry to buy see :smiley:

10

I’m intrigued by the buying process, so I hope I don’t derail the thread (mods, please tell me to open another if more appropriate).

Is it normal for vendors to expect a ‘higher than asking price’ offer?

In England, where I am, the asking price is normally what the vendor hopes to get. In a flat market, buyers will offer under that price, in a strong market, you might get buyers offering the asking price, and in a bidding war, the price might go just above (like, 5k) merely because someone is desperate to get the house, but pretty much the asking price is the asking price.

In Scotland, however, the ‘asking price’ is a minimum, as the actual sale price is often more in the range the OP outlined. Buyers have to take the advice of their realtor to gauge what they should bid, and with sealed bids in Scotland being pretty much the norm, there’s a lot of guess work involved.

So I guess what I’m saying is, the vendors’ counter offer would be ridiculous in England, but entirely within the right range in Scotland. How does it work in Canada?

11

In the Toronto property market at least it depends whether house prices are going up or down. When they are rising it is reasonable for the buyer to ‘expect’ a higher than asking price in that buyers may offer over the asking price for their first offer. The reason for this is that they expect that the property may get multiple offers and if yours is way below the others they will exclude you from negotiations.
In a falling market or a market where you don’t expect multiple offers it would not seem normal for the buyer to expect higher than asking, nor for the buyer to offer more than asking.
In any market the seller can try to negotiate a higher price than asking, but unless there are other bidders their argument won’t hold water and they’ll just seem nutty.

In Scotland it be in the right range to ask for 133% of asking? Or did you just mean expecting a higher than asking price is reasonable? What if someone offered the asking price and there are no other bidders, the seller can obviously walk away, but can they get away with asking for more?

12

Immediately after my house was listed, I had a guy offer my asking price. The only catch was he had no money, lousy credit, etc. He begged me to “work with him”.

13

For a while, there was a rash of bidding wars for houses in Toronto. Some real estate agents think it’s a great strategy (get a bunch of bidders in the door with a low [fake] price and then pit them against each other), some don’t (my agent didn’t bother; when we sold our condo, we said the price was non-negotiable).

Expecting one person to have a bidding war against himself is not normal!

EDIT: I’d love to live near Bay & Wellesley (I used to have an apartment by Jarvis & Wellesley), but my wife prefers a house to a condo. North York has its merits, too. :slight_smile:

14

I meant that expecting a (sometimes much more than) asking price is standard, as the asking price is a minimum, and often a low minimum at that. Properties prices are normally listed as ‘offers in excess off’, and your have to rely on the advice of your realtor to judge what would be a good offer in the current market. I found it a quite maddening system, particularly as many sales are done via sealed bids, which means it’s total guesswork as to what the vendor might be looking for.

And yes, I’m sure the vendor could ask for more if someone just offered the asking price, as that’s the way it works in Scotland. My ex bought a flat years ago that was listed at ‘offers in excess of £75k’, he negotiated directly with the vendor, asked him what he was really looking for and settled on £90k. They’d be laughed at in England, because the assumption here is that the asking price is what the vendor is looking for, so if someone offers it, it should be accepted unless there’s a bidding war. In England, that flat would have been listed at £95k.

15

That is interesting, I’m from Ireland and the Irish system is pretty much like the English and Canadian system. The Irish property market has just gone through a rather large property bubble, and the Toronto market had a big bubble in the '80s is probably in a bubble and deflating currently or maybe is on its way to a burst.

I don’t keep a close eye on the Scottish property market, but I wonder if this kind of bidding process makes bubbles less likely. I know that I would be very reluctant to even buy property if I had all of the uncertainty that this system seems to have.

16

I’m just glad we don’t have to worry about gazumping in Canada!

17

My understanding in the US (yes I know there are may different jurisdictions, but in the ones I’ve bought it) that if a seller declines an unconditional asking price offer, s/he is liable to the agent for full commission.

Of course, no one really makes an unconditional offer. There are always conditions like passing inspection.

18

Some sellers in Scotland can’t be bothered with the game either, and particularly if they want a quick sale, will list as “Fixed Price £90k” as per your example!

19

Oh god, gazumping is a nightmare in England, where we don’t even put deposits down. It’s all ‘gentleman’s agreement’ crap until you exchange contracts about the week before the move. Our property market is like the Wild West.

20

Yeah, since the property boom collapsed a lot more propeerties are being sold at fixed price or ‘offers around’ rather than ‘offers above’. A few years ago, though, in popular areas you would be expected to bid at least 30% over the list price. It’s a blind bid system so there’s no gazumping and you have to wait until they open the envelopes to see who bid most (although the sellers can accept a lower offer if they want to)

Commercial property’s more negotiable, though.