Would you enter a bidding war for a house?
Earlier this week, we detailed one of the more awful stories in real estate bidding.
In Toronto last month, a modest bungalow was listed for $759,000. Forget for a moment that any modest bungalow for three-quarters of a mil is preposterous on its own, but it nonetheless attracted its share of suitors, who placed bets that their offer would be high enough.
And then, a mystery Chinese buyer swooped in, dumped $1.18 million on the house, and snatched it away. Well, then!
Of course, this is a pretty brutal, uncommon tale of home shopping, but is it perhaps just the latest sign that bidding wars are fun for no one? A new survey suggests Canadians think the latter.
According to a poll conducted for BMO Bank of Montreal, only one-quarter of prospective home buyers would engage in a bidding war, meaning 75 per cent of Canadians would rather simply walk away.
*Bing: How to negotiate your home’s closing price
Half of those willing to enter a bidding war said they’d pay as much as 10 per cent above the list price. A tiny chunk went further, saying they’d pay as much as 20 per cent above the going rate. (For your curiosity, the above Chinese buyer reportedly paid 55 per cent more than the Toronto bungalow was listed at.)
Not surprisingly, it is men that admitted they’d be more likely to enter a penis measuring, I mean, bidding war for a house.
By the BMO study, men were more willing than women to bid as much as 120 per cent of the list price. About one-third of men (34 per cent) said they’d overbid by 20 per cent, whereas only one-fifth (20 per cent) of women said the same.
Have you entered a bidding war for a home? If not, would you, and how much would you be willing to pay extra for a house you really love?
By Jason Buckland, MSN Money
Posted by: SP | Apr 19, 2021 8:46:18 PM
Would I personally enter a bidding war for a house to live in? No.
Would I enter a bidding war for a house if I was going to make a lot of money from it and I didn't have to live there? Of course.
I had a family member that purchased nice home in Toronto in the late 1980's paying above the asking price because he knew that he was going to make his money back turning it into a halfway house (which he later did) much to the neighbours later 'disappointment'. Great for them, horrible for the neighbours.
The housing market in BC always smelled a bit funny to me. Low incomes but Crazy high house prices and houses purchased frequently for cash. No possible way this could ever end badly.
The Canadian housing market now reminds me of the late 1980's in Toronto.
Posted by: Troy Jollimore | Apr 20, 2021 5:59:02 AM
'Penis measuring'? What an ass! And how could someone that writes a column about housing and finances for, what I'd assume, is a living, show such ignorance?
Market swings are normal in a capitalist system, and right now it's definitely a seller's market. Rock-bottom interest rates, high personal net worths (along with a sense of entitlement) and, in this case, open season for foreign investors mean that bidding wars are a lot more common now than they used to be. People pick a neighbourhood, or a particular house, and THAT is the one they want. NO exceptions. Even if one next door goes on the market for 3/4 the price. These days, the bigger and fancier looking, the better. Even for childless couples. Gotta have >2500sqft to properly entertain guests, right?
There's enough money going around that this 'bubble' might not burst. Bad news for me, but I won't cry if I can ever afford a 'nice' house. Bear in mind too, that my youngest brother was involved in a bidding war a few years back for a house that added almost $100k to the asking price, which was high for that particular house (although this was in Fort Mac.). My family thought he was throwing his money away! When he recently sold it, he made an additional $150k on the sale. Who was the one laughing then?
We know what we know, and we can make predictions left, right and center, but if these younger kids never experience the depreciation of a collapsing housing market, along with double-digit interest rates, why wouldn't they just keep spending? It just won't be me...
Posted by: Clear & Focused | Apr 20, 2021 6:42:53 AM
Funny how everydaymoney tries to deflect the truth about foreign encroachment and the real 21st century serfdom it creates - by attempting to make it into a gender issue.
Quote: "penis measuring"
Ya, men are to blame... now all you simpletons can enter into the gender blame game while you blindly walk into feudalism.
What a tool you are Jason Buckland.
You are Satan's minion.
It is bad enough if you came up with this drivel on your own, but if someone asked you to write such horse sh!t, and you mindlessly do it without asking yourself why... then you deserve everything that is coming to you.
Actually, you deserve it all - regardless.
Posted by: StevenM | Apr 20, 2021 10:23:21 AM
Really? A bungalow for $1.18 mil? I had no idea that Toronto was so cheap. Bungalows in my neighbourhood go for $3 mil these days -- http://vreaa.wordpress.com/2012/03/15/you-can-tell-a-lot-about-this-listing-at-close-to-3million-for-a-west-side-tear-down-bungalow-in-vancouver/
Can't believe how dirt cheap Toronto is.
Posted by: Clear & Focused | Apr 20, 2021 11:26:02 AM
So what?? You all grow pot out there. So you buy houses with weed money, and jack up the prices for everyone else. If you allow your government to enact laws that foster this, than you also deserve it.
Posted by: Dr. J. Steed | Apr 20, 2021 4:53:10 PM
What is so preposterous about a modest bungalow for $759,000? This means nothing. Is there something wrong with bungalows? What do you define as a modest bungalow? How large was it? What was it's location? (more specific than just Toronto!!) I bought a moodest bunglaow (4,000 ft2) as a 3rd property a few years ago on Lake Huron for that amount with an incredibly beautiful beach. Oh, and to "Clear & Focused", I see that you are more "dazed and confused" than ever. Get a real job!
Posted by: Q | Apr 21, 2021 7:58:06 AM
Just goes to show that 25% of the population are mentally challenged and that the old addage "more money than brains" is still current.
Posted by: StevenM | Apr 21, 2021 11:15:36 AM
Clear & Focused wrote: "So what?? You all grow pot out there"
Nah man, I live in Dunbar. The drugs are all out in Strathcona or the DTES. Life's pretty great out here, but I'm amazed that I could sell my house, buy two in Toronto mortgage-free and still have another million left over.
It seems to me that housing prices are very low in Toronto and will probably be growing a lot in the next few years. It might be worth looking into buying a few investment properties in the city.
Posted by: Troy Jollimore | Apr 21, 2021 9:10:39 PM
Dr. Steed, glad you're doing well... But the 'modest' remark for a 4,000sqft. bungalow, pretty much defines my statement of 'sense of entitlement'. My definition would be around 1,500-2000sqft...
But these are the people that will push us towards the 'feudalism/serfdom' seen in Europe. "You make less than $150k a year per person? Paupers! If you wanted to live normally, why don't you get REAL jobs?" The funny thing is, I was doing some looking the other day. Putting downtown Toronto aside, a house for 1.2+ million in the York/North York region is actually a nice 'mini-mansion'. The odd thing is that the same house in the Halifax area is JUST as expensive, if not more. Huh...
Posted by: Jack | Apr 25, 2021 2:04:42 PM
@Troy Jollimore... what on earth has Dr. Steed's definition of "modest" in terms of square-footage have anything to do with "sense of entitlement"??? How far is your head up your a**? Do you even understand what you are talking about in your earlier post? Who the F are you to decide what is an appropriate home for someone????
Posted by: DrVex007 | Apr 28, 2021 3:40:20 AM
Jack seemingly missed the point. Troy Jollimore was merely stating that a 4000 sq ft bungalow is NOT modest. That is a big freakin' house.
As for the actual topic. I would never enter a bidding war. I might offer more ONE time, but then I am out if they counter. I have been through the home buying experience numerous times and it never feels good when you overpay, so a simple solution. Avoid it. Do you really NEED that house?
Posted by: Steve | Jun 17, 2021 6:31:33 AM
I find it ammusing that some clown from Vancouver posted( yes you Steven M) just to compare his house value in Vancouver. After spending 2 years in the city I was never so happy as to get out o0f Vancouver and back to Ontario . The Asian influence on the city is out of control with oversea money driving up valuations which I find hard to understand as the crime and drug problem in the city is horiffic not to mention the 6 months of dreary rain. The people who say Vancouver is the best city to live in in Canada have obviously not lived there or spent any time around the city it is mostly a shithole overcrowded with traffic and gangs. The smartest thing you said is to buy in toronto as it is mostly a vibrant urban centre and has vastly more to offer than any other city in the country. And I do realize there are good parts of Vancouver as well just not enough to make me want to stay Both cities real estate values are out of touch with reality and will eventually crash as has happened in the past . values will come to rest at a level that suits the median income in the area. If they do not the people that had to pay a million dollars for a bungalow will not be able to afford the maintenance or taxes thru time and the area will suffer from urban blight as happened in the US and values will collapse