By: Stephen Foti

A single reason for multiple offers

Tags: A single reason for multiple offers

In February of this year the Globe and Mail published a critical report on the real estate sales industry, focusing in particular on the behaviour in the overheated British Columbia housing market. Two major areas of focus contained within the report were ‘shadow flipping’ (re-selling a property before the buyer had even closed on it) and multiple offers on a single property. The former, while I’m sure it happens occasionally, is not a major factor in the local real estate market – at least not yet. The latter is a daily occurrence. Undoubtedly this is an extremely frustrating situation for home buyers, especially for first time home buyers. The real losers in the real estate market however are the buyers of tomorrow. It is not uncommon today for a properly priced home in Guelph to attract multiple interested parties. (Not surprisingly, one half of the equation loves this scenario, the other half not so much.). If 10 of those interested parties put pen to paper and present an offer to the seller, forgive me for the stating of the obvious, but 9 of them are going to leave disappointed. As in any situation in which the majority of participants feel frustrated or aggrieved, it is not surprising that complaints and accusations emerge. Unfortunately lost in the disappointment and blame is the root of the issue. Namely, we are not experiencing a demand problem, rather we are experiencing a supply problem. Basic economic theory would tell us that if ten people want a widget, and only one exists, someone will come into the market place and build more widgets. Unfortunately, the production of more widgets is an extremely onerous process, and all indications are that supply will continue to be more stifled – not less.
As a professional in the industry, I would like nothing more than to tell a client my sales prowess and marketing acumen garnered multiple offers and a sale price above asking – if only it were true. Provincial and municipal housing policy however, deserves the real credit. Or, from the perspective of someone not yet fortunate enough to own real estate – the blame.
This is not intended to absolve my industry from any culpability regarding our perception within the market place. It is incumbent upon us to earn the trust of the public at large (both our clients and, just as importantly, the clients of our competition) by treating all people fairly and honestly. It would also serve us well to remember, honesty, like pregnancy, does not come in degrees. Either you are, or you’re not. Lastly, brokers like me, have a responsibility to retain only those we know without a doubt meet these standards. Not only is it the right thing to do, it is also good business. We are after all, in the trust earning business. And trust is earned in drops and lost in buckets.
Thanks for reading!