Welcome to my Blog,
I post updates on Vancouver's Real Estate Market with a dash of my personal thoughts and opinions
July 20th 2016
The slow emergence of the "Not So Unexpected"!?
The REBGV numbers show that the buyers continue to compete for homes listed for sale across the Metro Vancouver housing market. However, we observe less number of competing offer situations and more offers with subjects, whether be it finance, inspection, appraisal etc.
While in a traditional or "Normal" Real Estate market this could be an indication of a slow "shift" towards a less aggressive seller's market or even towards a more balanced market but I personally see the root of this change in mainly two reasons, since Vancouver is anything but a normal market.
1. Buyer Frustration:
Many buyers are starting to give up on their home purchase dreams and wait before testing the water again, I'm sure many of you who have been home hunting in the past few months can relate to that but for those who have not, imagine this scenario:
You have finances in order, your down-payment ready, a list of your favorite neighborhoods and market analysis prepared by your Realtor, attended open houses and have found "the one" you were looking for.
Your Realtor shows you the fair market value and assists you with a purchase price but it's up to you how far up you wish to compete. You may reasonably put another 5 to 10% on top of the market value (which is NOT necessarily the listing price as it could be irrelevantly low with the intention to create a bidding war) and send the offer with your fingers crossed.
In many occasions you probably won't even get a call back because you had subjects on your offer when there are 4-5 another cash offers who are willing to go way above the market price to get the property. THIS is the dangerous time when buyers feel the heavy emotional burden of competing and after losing a few they may get frustrated and consequently either pay unreasonably high prices for properties which will lead to an exaggerated "Buyer's remorse" or succumb and "leave the game" for a few month or until they sense a change in the market.
2. Sellers' Unrealistic Expectations:
"Johnny Sold their house in "..." days "..."% over asking, cash offer, no subjects etc"!
I'm sure you have all heard similar stories to these which might be one reason many sellers consider listing their properties and utilize the funds that this hot market provides for them to either downsize, invest or move away from Vancouver.
However, this has also created unrealistic expectations which has lead to unreasonable rejection of great offers by many sellers.
"There must be someone with more money and a cash offer out there for me.." This might or might not be true but it is precisely the realtor's responsibility to explain the risk of any action to the sellers.
I have witnessed more than a dozen listings losing an offer at asking price or even over the listing price only to be forced to reduce to lower prices to attract more buyers. This means more days on the market and we all know what happens to listings that are listed for too long in a hot seller's market. The buyers automatically and often wrongfully assume that there must be something wrong with the property. "If nobody wants it why should I take the risk?"
We have to accept and acknowledge that in an exceptional market like Vancouver you can not afford to suffice to outdated and traditional ways to market your property or to try to purchase one.
Always talk to a prudent & trusted Realtor before purchasing or exposing your property to the market.