Paul and Diane Laflamme: December 2020

Saturday, December 5, 2020

Briana Doyle: Toronto-style tactics put pressure on home buyers

Author of the article:

Briana Doyle • Special to the Montreal Gazette

The recent acceleration in rising home prices in Montreal has real estate brokers making comparisons to Toronto and Vancouver. While prices here are still far from reaching the same heights, buyers and sellers are taking advantage of Toronto-style tactics to stoke bidding wars — or, as buyers, to firmly seal a deal by making an offer the seller just can’t refuse.

One of the reasons there have been so many bidding wars lately is because sellers are increasingly being coached to request a hold on all offers until a few days to a week after a home hits the market.

Typically, the home is put on the market mid-week, and then the broker books as many showings as possible on the weekend, around the same time. Buyers cross paths with each other at the showing, which creates a sense of competition and urgency. Those who are interested are told that all offers will be presented on a specific date, usually a few days later.

Knowing that there are likely to be several offers on the table, buyers — especially those who have already lost out in previous bidding wars — are motivated to put their best offer on the table, which can be tens of thousands over the list price.

Deep-pocketed (or very desperate) buyers have found a way to get around this: make a “bully offer,” a guns-blazing offer so sweet that the seller takes it on the spot, deadlines be damned.

A broker with the Broady Windsor Group, said this happened to him recently in Hudson. The buyers he was representing wanted to put an offer in on a home. They were told on Tuesday that the seller would review all offers on Thursday. But that night, the seller got an offer with a very short deadline. It was an all-cash offer, with no conditions, and $100,000 over asking. It was an offer they couldn’t refuse, and Broady’s clients lost out on the home.

By law, a buyer can make any offer they want and it has to be presented to the seller,” Broady said.

Cash offers like this one are becoming more common, he said. He also recently had a $1-million cash offer on a Beaconsfield property, with no conditions. The buyers were Montrealers who had been living in California and decided to move back.

Buyers who lose out in a bidding war do have another option: they can request to be the “backup offer.” It’s kind of like being the understudy in a play. If the winning offer falls through for some reason, the backup offer is guaranteed to be centre stage.

If you’ve been outbid on your dream home, this tactic can offer a thread of hope. Yet Broady cautioned that there is a downside: your offer is guaranteed to stand for two weeks or until the buyer in first place removes any conditions (such as finalizing financing or passing inspection). That means you aren’t free to put in an offer on any other properties during that period.

In bidding wars, some buyers overextend themselves by offering more than the bank will lend, or end up walking out after the inspection reveals problems with the home. If so, it’s your lucky day. If not, you’re back to scouring Centris for a place to call home.