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Fake Asking Prices

DearSummer

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How can the real estate "professionals" get away with stuff like this?

So for the unfortunate east-end sellers, offer night came and went with only one bid. It was higher than the asking price but not as high as they were hoping for. They cancelled the listing and came out again with a new asking price $60,000 higher at $689,000.

http://www.theglobeandmail.com/life...relisted---at-a-higher-price/article19871595/

This is pure and simple false advertising. Completely shady. Has this always happened or is this relatively new?
 
Offer dates are definitely nothing new but as supply is still low and demand for single family homes keep getting greater and greater, holding back offers in Toronto proper is almost a given now. Is it legal? Sure. Is there a competitive advantage for the seller? Sometimes. When it backfires, that's when the listing usually bumps the asking price back up to a more realistic figure and the listing then states "offers welcome anytime". It happens very frequently.
 
I don't see the problem.

Would you be annoyed if Wal-Mart was advertising an item on sale for $10 but then when you showed up at the store they said it actually costs $12?

What exactly is the point of setting an ask price if you won't sell a house for that price? It's bad faith, pure and simple.
 
You would be a fool to assume the listed price is the "proper" price as you would at Wal-Mart. In fact, a good agent should know in advance if the price is a low teaser price or not. Similarly a good agent should be able to tell you if the listing is too high.

If you have a fair price in mind, make an offer for that price with room for negotiation. If they don't accept it but counter, then you can negotiate. If they ignore you then just move on.

I mean really, if you see a price of $700000 and you offer $630000, should they freak out on you? Of course not. I know some do but the smart thing for them to do is just to negotiate.

It works both ways.

Oh and yes, I have been in both situations. Didn't bother me one bit that I knew the price listed for a house I was considering wasn't what the sellers were expecting. My agent told me in advance that my planned offer which was $50000 over asking wouldn't cut it, so in the end I just didn't bother making an offer and moved on. The house eventually sold for $200000 over asking. I eventually bought a house way under asking. In neither instance did we assume the list price was the appropriate price.

Now if a house in question is appropriately priced at $639000 in the first place, and they're wanting $689000, then that's just being unrealistic. After it sits on the market for a while, the price may drop back down. Then you can make an offer then if you haven't already bought something else.
 
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^ It's basically like eBay where buyers bid on the item. Supply and demand essentially will dictate at what price it will sell at. The major difference, of course, is that potential buyers have no idea what other offerer's bids are. In the case of real estate, the seller's reserve price is also a moving target, depending on the bids received. Similar to a real estate seller, if an eBay seller doesn't get any bids that meet or exceed their reserve, they can then opt to re-list with a "Buy It Now" option, which is what the re-listed higher price fundamentally is. I guess it would be an interesting element were real estate sellers to include a higher "Buy It Now" option on their MLS listings. :eek: I can only wonder how that'll work out!
 
but that's the auction concept and not a buy-sell transaction.



^ It's basically like eBay where buyers bid on the item. Supply and demand essentially will dictate at what price it will sell at. The major difference, of course, is that potential buyers have no idea what other offerer's bids are. In the case of real estate, the seller's reserve price is also a moving target, depending on the bids received. Similar to a real estate seller, if an eBay seller doesn't get any bids that meet or exceed their reserve, they can then opt to re-list with a "Buy It Now" option, which is what the re-listed higher price fundamentally is. I guess it would be an interesting element were real estate sellers to include a higher "Buy It Now" option on their MLS listings. :eek: I can only wonder how that'll work out!
 
^ It's basically like eBay where buyers bid on the item. Supply and demand essentially will dictate at what price it will sell at. The major difference, of course, is that potential buyers have no idea what other offerer's bids are. In the case of real estate, the seller's reserve price is also a moving target, depending on the bids received. Similar to a real estate seller, if an eBay seller doesn't get any bids that meet or exceed their reserve, they can then opt to re-list with a "Buy It Now" option, which is what the re-listed higher price fundamentally is. I guess it would be an interesting element were real estate sellers to include a higher "Buy It Now" option on their MLS listings. :eek: I can only wonder how that'll work out!
That's sort of like what bully bids are. If the house looks good, and the buyers know it will sell for more, even if there is a set bid date some buyers will send in an early bully offer that is significant higher than asking, hoping that the seller will accept anyway.

Here's the scenario.

Listing at $639000, with expectations a bidding war could bring it up to $669000 to $699000. Bully offer comes in and offers $685000 with no extra conditions. A seller in that context might consider taking the offer, because there is always the chance that offers on the bidding date will be below $689000 or $679000 or even below $669000, esp. in a non-spring market, or else it could be a high bid with no conditions. The problem here is that the seller can then turn around and tell all the other potential buyers' agents, which effectively just moves up the bid date. However the bully in this case is hoping that the early offer would catch other people off guard.

This I would find more irritating.
 
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It's funny to still see agents boasting that their listings sold for more than asking, when the asking price is well underpriced to begin with.
That claim is meaningless these days.
Deception is the norm and more accepted now and unfortunately the OREA will not do anything to control it.

A good agent will look out for their clients and advise them not to offer more than what it should be, however with a low inventory of homes for sale and rampant bidding wars on the more popular or desirable properties, people are getting really desperate and are willing to pay a lot more just to get into a home than to have another home slip through their fingers. This adds more fuel to the fire by artificially increasing property values.
 
Personally from what I have seen, it's more the exception than the rule to have bidding wars send a price way beyond fair value.

What you generally get are homes that are sold quickly at pretty fair price, or maybe homes that might be 5% over. And sometimes we get neither. A house that is truly worth $689000 getting sold for say $757900 (10% over) is pretty uncommon. At 5% over it'd be $723450. However, if the list price is too low to begin with, say at $639000, that $723450 just looks like a lot, because it's 13% over list price.
 
It's funny to still see agents boasting that their listings sold for more than asking, when the asking price is well underpriced to begin with.
That claim is meaningless these days.
Deception is the norm and more accepted now and unfortunately the OREA will not do anything to control it.

...

I agree, it's totally misleading, but hopefully people recognize that "sold above asking" means absolutely nothing. It's pure marketing mumbo jumbo...but it's not illegal. It does irk me when agents keep stressing that it sold for over asking, when the asking price was under market value to begin with.

Personally from what I have seen, it's more the exception than the rule to have bidding wars send a price way beyond fair value.

...

Eug took the words right out of my mouth. Even though I don't like the idea of sellers listing low with an offer date, when you actually look at the price most homes sell for, the majority of them really aren't way off from fair market value. Occasionally you do get some where buyers put in eyebrow-raising, jaw-dropping, fury-inducing winning bids but, for the most part, from what I see, the figures seem realistic.
 
Interested in thoughts on this:

House is open for bids. Listed below market value. There are many bids, including above asking (typical Toronto situation for houses). Buyer A has the highest bid but the offer is conditional. Buyer A has no intention on closing the house for the price they bid and uses the conditions to get out of the deal. Buyer B then swoops in after the fact with full knowledge of the market value of the home, likely less bidders (all other bids likely expired, buyers pissed off, etc.) and puts in an unconditional offer to purchase for less than what Buyer A agreed to pay.

Can we turn the tables on sellers? If they want to throw out fake asking prices, why can't we throw out fake bids?
 
Personally from what I have seen, it's more the exception than the rule to have bidding wars send a price way beyond fair value.

What you generally get are homes that are sold quickly at pretty fair price, or maybe homes that might be 5% over. And sometimes we get neither. A house that is truly worth $689000 getting sold for say $757900 (10% over) is pretty uncommon. At 5% over it'd be $723450. However, if the list price is too low to begin with, say at $639000, that $723450 just looks like a lot, because it's 13% over list price.

What is "fair value" if not what something is sold for? Something is worth ONLY what somebody else is willing to pay for it.
 

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