Right now, buyers are competing and paying over list price to snag a home. Sometimes that's ok, but sometimes it's not.
So, here's one of the least popular things I say. And, as a parent, husband, and son, I say a lot of things that aren't popular, haha.
Here we go:
"List Prices are Made-Up Numbers"
-Curtis Bonar, 2023.
It's true, sellers just make them up. Even Realtors just make them up. Appraisers too.
And buyers can get hung up on made-up numbers.
Just a few weeks ago, I wrote an offer on a home that came up in Greens on Gardiner, and we were competing with other offers. It was a semi-detached (duplex) and in rough condition. Beat-up kitchen cabinets, it needed new flooring and new paint on the walls and trim. It was hard to believe the home was less than ten years old.
They last listed the house for sale in 2021 for $274,900, and it didn't sell.
The good news for the sellers is that the supply of these types of homes has not increased in any meaningful way lately, but the supply of people (new Canadians) who buy them has increased in a meaningful way. The price has gone up!
So, it was a great deal when they listed it again, two years later, for the same price, $274,900, even with condition issues factored in. A similar one, without condition issues, just a few doors down, sold for $338,000 last week.
And this is where my buyer got hung up on a made-up number.
When we didn't know there were competing offers, he wanted to try and get it for 10k less than the list price, maybe offer $263,000 or so. Everyone likes to say they got something for way less than the list price (even though it was priced way too low to start with.)
Then we discovered we were competing with other buyers. He wanted the house, but didn't think he could possibly go "over list price." That would be embarrassing, wouldn't it.
He held his nose and took a run at it anyway, offering $276,500—$1600 above the list price.
He didn't get it.
"That's ok—I'm not into paying way more than the list price and getting ripped off," he said.
But what if the sellers had decided to make up a number of $284,900 as their list price. That wouldn't have been overpriced in this market, still a good deal. If they had, we might have offered $280,000, had our offer signed, and paid 5k less than list! That would have indeed been a win.
Paying over list price is ok sometimes. It all depends on the list price 😉
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