December is one of my favorite months of the year… Lots socializing… with many parties and get togethers, it’s just a nice time to catch up with friends and family. What I love about this time of year is that everyone is happy and in a good mood!
So how do you capture some of that good mood and translate that into your home or condo getting sold?
The homes or condos on the market right now are usually what I call the “left overs” from the Fall. It’s easy to tell the moment you walk into a “stale” listing… The sellers (and agent!) aren’t putting the same effort in selling the home as they were when the property first came on the market.
What do you do if you HAVE to sell your home in December? Why not steal a strategy from one of the best retailers on the planet… Starbucks.
What does Starbucks have to do with selling houses?
I think Starbucks does a brilliant job at marketing, especially at this time of year. They’ve got the red coffee cups, holiday themed drinks, as well, all of their coffee shops are (tastefully) decorated in the holiday spirit.
As a seller you have to do your best to create an emotional connection with the buyer. Make the buyer feel very much at home and have them envision themselves in your home. That is exactly what Starbucks does! They’ve created a very strong emotional connection with their customers and have made their stores very cozy and inviting.
I believe there is nothing more inviting than going into someone’s home who’s decorated their home tastefully for the holidays. I am amazed at how few sellers actually follow this strategy. It’s not that’s difficult! Don’t go overboard, but adding some holiday décor to your space will go a long way.
I know what most sellers are thinking right now… Why should I decorate for the holidays when I’m moving in a month or two? Well, if you don’t decorate you run the risk of not selling your home at all!
If you want to steal another page right out of the Starbucks manual, why not host a themed open house for buyers and realtors where you serve some hot chocolate and gingerbread cookies. (I mean who doesn’t LOVE gingerbread cookies, right?)
If you’re considering buying or selling this winter, there really is no need to put off a decision until after the New Year. December can be a great time – I am here this holiday season to help get your property sold!
Over the last couple of months I have seen a substantial increase in “bully bids”. A bully bid is otherwise known as a preemptive offer on a home accepting offers on a specified date. Holding back offers or specifying a particular offer date has been common practice in Toronto for the past decade or so.
Now, more buyers are using the preemptive offer as a strategy to gain leverage in a seller’s market. It doesn’t always work, but it’s something that both buyers and sellers need to be aware when they’re “in the market”.
As an agent, I have been on both sides of bully bids (representing buyers who wish to aggressively go after a property as well as representing the sellers end of the transaction when would be buyers are trying to “bully” their way to the front of the line).
When you are selling your home, you need to be aware that you may get an offer before the offer acceptance date. You do need to have a conversation with your real estate agent to make sure you discuss this scenario and how to re-act to such an offer. Your agent should also give you an expected sale price (usually a range betweeen 1-2%) and an approximate number of offers that you might expect. Having myself represented sellers countless times on offer nights, it’s more of an art than a science in predicting the number of offers, but having a sense of what to expect is good if you’re presented with a bully offer.
My advice to sellers is that’s it’s always better to wait until the offer date than to accept a preemptive offer. The only exception to that rule is of course if the offer is “too good to be true” and significantly better than the “market” value.
On the flip side, if you’re a buyer you need to be aware of the bully bid for two reasons. Firstly, if you a home is newly listed on MLS and is holding back offers until the following week, don’t wait to see the home. Why? It might by sold the time the weekend rolls around. The chances are slim, but definitely possible. You don’t want regret about not seeing that great house that sold before you even got a chance to see it. New house listings typically come out on Tuesdays, Wednesdays or Thursdays and I always recommend to clients to see the home within the first day or two of being on the market.
The second reason - if you do find that “perfect home” you should at the very least consider a pre-emptive offer. I am not suggesting you should bully bid, but at the very least you should consider the option. In this case you would have to prepare a very strong offer and give the sellers only a few hours to consider the offer. It does throw the listing agent off their game and they’ll scramble to try to drum up competing offers. This strategy doesn’t always work and there are definitely risks involved in doing this, but as buyer should be aware this as a possible option.
This real estate market is still very much a seller’s market and you need to be aware of the different options available to you when competing with other buyers and sellers.
I was in a multiple offer last week and shared this story with my client and thought it would make it would make for an interesting (and relevant) post this week.
When sellers are in a position to accept more than one offer, price often becomes the differentiating factor. While price is extremely important, it’s not the only consideration…
Last year my wife and I had listed one of our income properties for sale in the Beaches neighbourhood and were reviewing offers a week later. Fast forward to offer night and we 4 offers to review (3 of which I considered in the same relative ballpark).
All 3 of these offers had our desired closing date. Here is what the offers looked like:
Offer # 1 was for $462,000 with no conditions, $25k deposit.
Offer # 2 was for $480,000 with a financing condition, $10k deposit.
Offer # 3 was for $470,000 with no conditions, $30k deposit.
At first glance, Offer #2 had the highest price however I asked their agent to explain why they were including a financing condition. The agent said his client’s plans were to live in the home and he was “rock solid” and he wouldn’t have any problems with financing.
“Ok”, I responded. “If financing wasn’t going to be a problem, then why include the condition?”
The agent explained that his Banker had recommended to include a financing condition in all offers that were to be presented.
I thanked him and asked him for a few minutes for my wife and I to make a final decision.
While it was awfully tempting to take the highest priced offer ($10,000 over the second highest offer) – for a split second I thought of what I could do with that extra $10,000 if the deal were to go through. Then, I asked myself : what would I advise my client to do in this situation?
The answer was an easy one – accept a firm offer, even if it isn’t the highest priced offer. And that’s exactly what we did.
I took agent of Offer # 2 and told him we’d accept a lower offer without any conditions and gave him the following advice: Your client needs to find a new Banker. Find one that will give him a full pre-approval so he can be competitive in the next multiple offer scenario he finds himself in. The agent thanked me for the advice and went on his way.
Fast-forward 3 weeks later that very same agent gave me a call. The good news is that they got an accepted offer (in multiple offers) and was looking for the name of a of a mortgage broker to help his client. He was also looking for some friendly realtor-to-realtor advice, which I happily gave as well.
Anyhow, the story didn’t end so well for this realtor’s client – long story short is he couldn’t qualify for the mortgage and had to walk away from this great home. He simply didn’t have enough stable income to qualify for the mortgage.
For a second, I felt bad that things didn’t work out for this guy, but at the end of the day there were a couple of important lessons to be learned from these series of events. First, if you’re in the market to buy a home – contact your mortgage broker first – they’re a fantastic resource and will give you options before you start house hunting. As a seller, the second lesson was – don’t be greedy – if you’re in the fortunate position to have more than one offer on the table, always give the most weight with the unconditional offer. An unconditional offer shows that they have done their homework ahead of time and if the offer comes with a healthy deposit – this only confirms their commitment to the purchase. As a seller, you want piece of mind knowing you can focus on your next move.
I met with a prospective client, Janet who wanted to sell her cute bungalow just north of the Danforth. She was looking to move into the better school district just West of where they were. When I viewed her home, I asked her to point out many of the upgrades she had done since she bought it. As we sat down, I asked her to tell me a little more about her motivation to sell, as I wanted to get a better idea of the bigger picture.
Before asking me what I thought her home was worth, she said that she needed $450,000 to make the move. She must have seen my facial expression completely change as she asked me if that was realistic. I gave her a copy of the Home Selling Guide that I wrote and included in it was a list of recent sales. I pointed out that the range in her neighbourhood for a similar type of property was between $410k to $420k. No bungalow in her area has ever sold for more.
She kept going back to what she “needed” to sell for to make the move. I could tell she was getting very emotional. I felt like her dream-squasher, telling her the price was not realistic.
I said to Janet that the only people that would benefit by listing her home at $450,000 would be her competition.
“What do you mean – the competition?” She asked.
I explained that an average buyer views 12.4 homes in a particular neighbourhood before submitting an offer. If her house was priced outside the range of what it is worth, then it would make the other homes on the market more appealing and help those sell – not hers!
I invited Janet to view 3 homes for sale in her neighbourhood with me the following day to see what I was talking about. I asked her try to view these homes as a possible buyer and compare against her home priced at $450,000.
Janet was very quiet and didn’t say much during these viewings. Once we left the third home Janet turned to me and said: “My house won’t sell for $450,000. I can see that now.”
Janet agreed that it’s very important to know who you’re competing against. On the advice of her mortgage broker, Janet decided holding off on selling her house until the spring. By that time she’ll have full-time hours at work, which will help her qualify for the mortgage she needs to make the move.
I know Janet really appreciated the honest no b.s. advice that I gave her. My business is completely built on referrals and I will not make any unrealistic promises I can not keep.