After 5 months in a row where the sales volume in Greater Vancouver decreased from the prior month, in October 2021 we saw an 11 percent increase in the number of sales when compared with September 2021. As has been the case for many months, October's sales also remained above the 10 year average. We don't know if October represents a reversal of the downward sales trend that we have seen since April, or if it was a temporary blip.
So, other than the overall continued lack of supply leading to the craziness of this market, what's the SCARY part? Last month we saw many homes receiving multiple offers where sellers DID NOT accept any of the offers. In most cases, this is a very dangerous decision for a seller to make, assuming they want to sell their home for top dollar. Seeing sellers deciding not to accept any offers after receiving multiple offers is very SCARY!
When there are multiple offers, as long as they are handled correctly, we can be pretty certain that the buyers competing are paying more than they think the property is worth. This is a big win for sellers. We know that homes tend to decrease in value the longer they are on the market and that initial offers tend to be the highest/best offers. When a home receives several offers, it is usually strongly advisable for the seller to take one of the offers. In the rare case where no good offers are received, of course we would recommend that the seller not accept any...but this is a very unusual scenario.
What do I mean by offers being handled correctly? In my experience, 2 things are critical: One, that the home is shown to enough interested buyers prior to taking offers and two, that once all of the offers are received, negotiations need to occur to obtain the best result possible. These things don't always happen. In this market, sellers will usually still do fairly well regardless....but why not get the absolute most for one's home?
The importance of these 2 factors was obvious recently. Last month, I saw 2 homes sell for less than I think they should have. In one case offers were taken before some of the interested buyers could get into the home. I think that, had the buyers waiting to get into the home been shown the home, the seller would have received higher offers. In another case, several offers were received and it seems the seller took the highest offer. In that case, I am quite sure that the offers could have been negotiated up to a higher number. Obviously I did not work for the sellers in either of these cases. We have a system aimed at ensuring all keen buyers see our sellers homes, but we balance that with not waiting too long for offers. Then, when I receive multiple offers for my sellers, during the negotiation phase I am able to maximize the offers for my sellers' benefit. Negotiation can lead to offers at a much higher price and better terms than what is initially offered by buyers, even when the buyers are competing in a multiple offer situation. In both examples above I am pretty sure the sellers were happy with their over asking prices but likely would have been happier with even higher sale prices.
When most of the interested buyers are able to view the home AND the offers received are properly negotiated, a seller should receive the highest amount the market will bear. In such cases, there is significant danger in a seller not accepting any of the offers. Some sellers may be holding out for extreme offers like some of those we saw last Spring. Failure to adjust expectations and adapt to the slightly shifted market reality can cost sellers a lot of money.
Timing is EVERYTHING in real estate....and the Fall is one of the best times to sell one's home. With current inflation rates leading to discussions on potential interest rate increases, which can lead to a less robust market, it will be important to ensure that sellers wanting to sell don't hold out for offers at prices that may no longer be achievable. "Waiting until Spring" could mean waiting for a market that is less seller favourable than our current market. I am obsessed with getting every last dime out of offers for my sellers....and saving my buyers as much as possible. Both of these results take place within the context of the market at the time. Ignoring current market conditions can lead to SCARY results!
If you have been thinking of selling your home or if you would like to discuss the current market (or anticipated future market) and how it may affect you, please let me know.