Perhaps house hunters were counting on their rivals being snowed in.
The day after the January storm which dumped 36 centimeters of snow on Toronto, a horde of buyers made it through the unplowed streets to see a four-bedroom detached house in Davisville Village.
“We listed it in the blizzard,” says broker Patrick Rocca of Bosley Real Estate Ltd. “We had 40 shows booked.”
Major arteries were still cluttered with abandoned cars and buses and the return to school was canceled, but potential buyers made their way to the two-and-a-half storey house at 354 Soudan Ave., with a asking price of $ 1,549-million.
“You had to get through the snow banks, you could not park on Soudan, but where there’s a will there’s a way,” Mr. Rocca says. “People figure it out.”
The following day, a bully submitted an offer and Mr. Rocca’s team notified everyone who was interested. Four more offers landed but the bully prevailed and the house sold for $ 1.92-million.
On the same day, Mr. Rocca listed an East York semi-detached house with a asking price of $ 999,000. That house sold for $ 1.45-million with two offers.
But while those two properties vanished quickly, some sellers did delay listing in the aftermath of the storm. Last week only 13 houses were listed in the midtown Toronto neighborhoods of Davisville and Leaside where Mr. Rocca does much of his business.
“We’re seeing a ridiculously low inventory,” he says.
Jimmy Molloy, real estate agent with Chestnut Park Real Estate Ltd., figures the dump of snow delayed many listings by a week or so.
“We did not need a blizzard on the first day of back-to-school in January, 2022,” he says. “That was not beneficial to anyone. People say ‘I’m going to wait until I see a little more sidewalk and a little less snow.’ ”
Stagers bringing in furniture and photographers trying to create appealing images all have more trouble maneuvering in the snow on narrow city streets. Parents who thought their kids would be returning to the classroom suddenly found them at home for an additional two days.
“It just slows everyone down,” he says. “When the obstacles get in the way, it does not lessen the demand – it just builds up pressure on the system. You still have buyers who have not seen a house since maybe the first week of December. ”
Kevin Larose, a real estate agent with Keller Williams Real Estate Associates, says the lack of supply is tempting some buyers and agents to try and circumvent the bidding process all together.
Often houses in the Greater Toronto Area are listed with a relatively low asking price and a date for reviewing offers is set for a week or so later. So-called bullies pre-empt the process by coming in before the offer date with an eye-popping bid that expires after a short window of time.
But Mr. Larose is seeing an increase in aggressive tactics now that bully offers have become standard practice. Two of his recent listings received a large amount of attention and queries from potential buyers.
In one case Mr. Larose listed a four-bedroom, detached house at 2461 Jarvis St., in Mississisauga with a asking price of $ 2,198-million.
The house sold after four days for $ 2.77-million.
Another property he recently listed in Mississauga received 10 offers and sold after seven days. The four-bedroom detached at 1069 Greaves Ave., was listed with a asking price of $ 1,698-million and sold for $ 2.1-million.
Mr. Larose has seen an increasing tendency for buyers who are frustrated at losing out on a few deals to fire their agent and approach him on their own. In some cases they have not signed a contract known as a Buyer Representation Agreement or it has expired.
“They’re going directly to the listing agent because we have the inventory.”
He regularly receives calls from prospective buyers looking for an edge in a bidding war. “What’s it going to take?” is a frequent question, says Mr. Larose, who advises the caller to line up an agent. In some cases another member of his team will negotiate on behalf of a buyer.
“The listing agent’s responsibility is to the seller,” he points out. “The buyer needs to be represented.”
At the same time, the ranks of real estate agents have swelled in the Greater Toronto Area. Mr. Larose figures the reason there are so many exasperated buyers trying to go it alone is that many agents are unethical or unprepared.
With so many agents and so little inventory, many are struggling to find business. And some simply lack professionalism.
“Many do not treat it like a business and many do not understand their fiduciary duties,” he says.
Some will try to boost their client’s chances in a bidding competition by offering to accept a smaller commission than the standard 2.5-per-cent paid to buyers’ agents on a deal.
“They give up commission right in the middle of negotiating.”
In such cases, the listing agent is obliged to inform the seller and the other agents at the table that one agent is willing to lower their commission.
Mr. Rocca at Bosley has also noticed such practices becoming more common in the past year as the heated Canadian market set new records for sales and prices.
Commission cutting creates havoc in a bidding contest, he says, and it clouds the process for the seller.
He explicitly states in writing in his listings that he will not allow it.
“If I have five offers and one agent says ‘I’m cutting my commission’, I say no you’re not,” Mr. Rocca says. “I do not work that way. There are no deals – you’re going to get in line with the rest of the people. ”
Mr. Rocca believes that the lack of supply in the market is contributing to strategies of desperation. But he’s receiving lots of calls from homeowners seeking evaluations, so he expects listings to see a good bump in coming weeks.
Farah Omran, economist at Bank of Nova Scotia, expects new inventory to be picked up almost immediately by buyers.
While housing sales in Canada were essentially flat in December compared to November, even after adjusting for the season, she believes sales were dampened by the lack of listings.
The increased tightness in the market is pushing prices up by a larger magnitude than the increase in sales.
Bay Street is forecasting a series of interest rate hikes from the Bank of Canada this year and those expectations may have contributed to a winter market that’s more hectic than usual, she adds.
“Stay tuned for what is likely to be yet another busy spring market,” Ms. Omran says.
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