question about holding back on offers

[trees]

As I understand it during the past few years in central Toronto it has been very common for sellers to hold back on viewing offers for several days after putting their house on the market.

Recently I have heard from several different sources (including some real estate agents) that this practice is no longer as common as it was—and indeed that it is now considered to be inadvisable. The only explanation I've heard for this development is that "buyers have got tired" of the system, or more particularly that they are leery of getting involved in bidding wars and therefore, if the sellers are holding off, some potential buyers will decide not to make an offer.

I haven't seen any statistics to back up the claim that the method is not much used anymore, or to show that if the method is used now it may backfire.

I'd be very happy to get more information about this — or just to hear the opinions of forum users on the subject.

regards to all from

trees

 

[cabbagetowner]

As I understand it during the past few years in central Toronto it has been very common for sellers to hold back on viewing offers for several days after putting their house on the market.

Recently I have heard from several different sources (including some real estate agents) that this practice is no longer as common as it was—and indeed that it is now considered to be inadvisable. The only explanation I've heard for this development is that "buyers have got tired" of the system, or more particularly that they are leery of getting involved in bidding wars and therefore, if the sellers are holding off, some potential buyers will decide not to make an offer.

I haven't seen any statistics to back up the claim that the method is not much used anymore, or to show that if the method is used now it may backfire.

I'd be very happy to get more information about this — or just to hear the opinions of forum users on the subject.

regards to all from

trees

i think that strategy only works well in a seller's market.

 

[cdr108]

IMO regarding holding back offers:

If you/your realtor priced the property ARTIFICIALLY low in the hopes of a bidding war then as you say, you may get some buyers leery of getting involved in bidding wars and therefore, will decide not to make an offer.

However, if you want to do an Open House with hold back; and the property is priced appropriately and shows well, it may generate good traffic flow and give you the best offer.


edit: trees, I reworded my comments and hopefully makes it clearer. I'm in agreement with you.

 

[trees]

reply to cdr 108

Yes, I understand what you say, but there's still something that worries me: if you don't hold back on offers and take them one at a time as they come in, it seems you may end up getting less for your house than you could have if you'd waited. (You may, for example get an offer on the first day your house is on the market, several days before the Open House.)

 

[TrickyRicky]

I'm not an agent so someone would have to confirm this for me: It is my understanding that the rules changed some time last year allowing a seller to sell to any registered offer at any time regardless of a declared holdback period. This changes the dynamic of the game. So if you want to buy and the seller declares they are holding back offers till say friday, the home could already be sold by friday thereby rendering the declaration of hold back period irrelevent.

 

[carturo15]

I'm not an agent so someone would have to confirm this for me: It is my understanding that the rules changed some time last year allowing a seller to sell to any registered offer at any time regardless of a declared holdback period. This changes the dynamic of the game. So if you want to buy and the seller declares they are holding back offers till say friday, the home could already be sold by friday thereby rendering the declaration of hold back period irrelevent.

When the seller is holding back offers, normally the agents does not present offers before the last day, they use to register offers just 1 or 2 hours before the time limit

 

[jackiechandc]

Here's a recent article in the Toronto Star about bidding wars with undervalued homes and holding back bids to create a multiple bid scenarios. Generally this works in a seller's market and in really hot areas. With today's current market, this will generally not work as well as before.

http://www.yourhome.ca/homes/article/471989

 

[cuzzin_elias]

I didn't accept offers until a week after listing my condo, I sold it the first day I accepted offers... so the strategy worked for me. And I just sold mine in July

 

[alafleur]

Agent's Thoughts (oxy-moron?)

Timely discussion.

I agree with the general sentiment on this thread that holding off on offers is primarily a tried and true method of creating a bidding war during a seller's market.

Anecdotal evidence suggests that this practice has become less and less common in 2008, while it was considered the norm in 2007. This would add to the growing body of evidence that the Toronto market is cooling, with the potential for outright price declines in the near term.

Sellers setting their prices artificially low and hoping for a bidding war now run the risk that no one will put in an offer, and they will be then either stuck with a low price, or forced to raise their price and then will be left with a stigma of being greedy or stupid.

Most sellers are now taking the strategy of setting the price at a level they would be willing to accept. AKA, things are going back to 'normal'. However, there still are hot pockets where every house is still listed at that magical number of $399K, even though everyone is well aware that market value is much higher than the asking price. East York is a prime example of this.

In response to what TrickyRicky was saying, a seller is never obligated to accept or reject any offer, no matter when it is received and no matter if they are holding off on offers or not. There are no laws in place to dictate multiple offer scenarios, although may argue there should be (another topic for another time). The entire process of 'holding off on offers' is entirely artificial. It is simply a free-market construct that tries to take advantage of supply and demand principles to maximize the sale value for a given seller. Think eBay

 

[daveto]

My understanding is that if a seller declines an offer that meets or exceeds their listing price, they then must relist at a price higher than the offer they declined.

If they fail to do so, they are guilty of false advertising and a complaint to MLS will remove their listing and/or a legal action filed would be successful.

This raises the risk for the seller who underprices. If they are unsuccessful in their underpricing tactic, they are either stuck with a subpar sale price, or the subsequent relisted price advertises to the market what happened and weakens their selling position.

This is just my undertstanding from reading various blogs, and I'm sure a realtor can confirm/deny.

 

[alafleur]

Daveto,

Sorry, but you are mistaken. There is a perception out there that what you are saying is true, but it is not.

Sellers are free to raise and lower their asking prices at will, and they are free to accept or reject any offer, any time. There is no law stating otherwise. A seller can even reject an offer that is for more than their asking price - it is entirely their prerogative to do so.

It all comes back to basic free market principles.

FYI, RECO is the governing body in Ontario that looks after all things Real Estate. Check this out for some of the basics on multiple offers: