It seems as though almost every week, I have a buyer or agent asking me about a 2 bedroom condo. They clearly are in extremely high demand right now. The average size of a condo in a newer building these days is around 550 sq ft. No wonder larger 2 bedroom units are in such high demand.
In addition, since the beginning of January this year, prices of condos have increased significantly and it’s now commonplace to hold offer nights for a condo, something that used to be ordinary for the housing market. The term, offer night, refers to the practice of listing a property one day during the week then selecting another night, usually 6 days later to take offers.
In 2016, you could list a condo and receive 3+ offers on offer night. What’s been happening since the beginning of January is that when a condo gets listed, it receives a “bully” or preemptive offer within 24 hours. A “bully” or preemptive offer is when a buyer decides that they do not want to wait until offer night to present their offer to the seller. Instead, they will prepare an offer with very few conditions and an offer price much higher than the asking price. It’s now the seller’s choice if they wish to accept the preemptive offer or wait until offer night.
You might ask, “Why would a seller accept a bully offer ahead of their offer night? Won’t they make more money if they wait a few more days?”
Not always. Sometimes bullies pay more than what they would have paid on offer night and sometimes that’s not necessarily the case. A good agent understands that if you are willing to make a bully offer, it had better be a really great offer. Otherwise, there is no point.
Some sellers get nervous when they put their place on the market and if they have a sure thing with lots of money, they are more inclined to take it. Remember the saying, “a bird in the hand is worth 2 in the bush”? Sometimes you really don’t know what could happen during offer night. You don’t always know if that bully will show up on offer night with another offer.
Some sellers want to get the sale process over as soon as possible so they can bring their pets back home, not deal with requests to see their condo and get back to their normal lives without having to keep the place super tidy.
The buyer with the bully offer might be sick of losing out on other offers, which is most likely the case, or could be going on vacation the following week and might want to secure a house before they leave town. So they feel that a preemptive offer is the only way to go.
For buyers, in this competitive market, bullying can be the only way to get the property you want. If a buyer bullies on the first or second day on the market there are fewer offers to compete with. The longer a buyer waits to make a preemptive offer, the more people have seen the property who could also show up with an offer. When everyone waits until offer night, there may be at least 5+ trying to offer on the same condo so as a bully, the buyer wipes out some of the competition.
Offer nights and bully offers are now the new norm for the Toronto condo market since last year. In 2015, things were much slower. Now that the mortgage rules have made things more difficult for first time home buyers, a house in Toronto may no longer be an option so a 2 bedroom condo is high on their list.
If you would like a NO OBLIGATION EVALUATION of your condo’s worth, please let me know. I’d love to pop by.