One of my clients texted me recently to share a story about her co-worker. She said her co-worker was in a bidding war with 12 other people for a condo in Yaletown and it’s the fifth place that she hasn’t successfully bid on. She is getting really frustrated because they are selling for way more than the asking price and more than she can afford. She is losing sleep and has decided to take a two month break.
A nice couple recently came through my open house for a two-bedroom condo downtown. We got to chatting and they told me that they had lost three times in three weeks in multiple offers and that they were left feeling emotionally drained. They currently live in a one bedroom condo and are expecting their first baby but have decided to wait until after the baby is born to continue their search for a bigger home.
This phenomenon has a name. It’s called Buyer Fatigue.
In a Seller’s market, where bidding wars and properties selling for significant amounts over asking are the norm, it’s tiring. It’s tiring for buyer’s. It’s tiring for their agents. It’s emotionally draining, frustrating and often hard to understand, when you continue to find, and then lose, the perfect home. Over and over again.
One of my colleagues whose client wanted to buy a one-bedroom condo for his daughter, which would then be used as a rental property down the road, has given up after months of searching. He said, “This market is ridiculous, there is no way to get any sort of a deal.” He feels the asking prices are high, never mind what things are actually selling for. For him, the numbers, as a rental, just weren’t making sense.
Another colleague recently listed a two-bedroom townhouse in East Vancouver that received 3 offers. The winning bid came from someone who claimed to have lost out on 12 previous properties. And yet another colleague, in North Vancouver, had one buyer who put in 14 offers on properties before she was successful.
I have been in multiple offers where the winning bid (out of six or more offers), was so far over asking that my clients have just shaken their heads, not willing to pay what the condo/house/townhouse has sold for. In one instance, the agent with the successful bid, whose client looked extremely pregnant, said they had been looking for 10 months and were so tired of losing and feeling so desperate, that they were willing to go beyond market value, just to finally secure a home. I have even seen tears from both buyers and sellers in emotionally charged, and at times, long-drawn-out multiple-offer situations.
The media these days is filled with multimillion-dollar homes that sell for a million dollars over asking, but I want to give you an example of one that is more common, and more relatable.
Last month, my first time home buyers, a lovely young couple, fell in love with a one-bedroom-and-den condo in Fairview. It needed some work, as it sported some botched DIY renovations, but the layout and location were great and they felt that 664 square feet would fit their lifestyle. The asking price was $336,000. The last two comparable sales in the building were May 2015 and August 2015. Sale prices of those were $341,800 and $345,000 respectively.
The sale price of this one? $438,000 with six offers. That is $102,000 over the list price!
Even accounting for the market increase, which was approximately 11 per cent for one-bedroom condos in Fairview since summer 2015, that is beyond reasonable market value. And over many first-time buyers’ budgets.
This is where the two extremes of buyer fatigue really kick in. Some people take a break or quit looking altogether, while others, who have lost too many times, are willing to pay extreme prices to finally “win”.
So what can you do as a buyer in this crazy market? Stay calm, offer on and don’t overpay (unless you are planning to live there for the next 15 to 20 years…) You’ll get something in the end.