Toronto’s bidding wars continuing

Even as the real estate market softens, vendors still offer conspicuously undervalued homes in some neighbourhoods.

Listing properties below the market value has become a common practice in the Toronto area over the past five years ““ creating a bidding-war mentality for buyers. Even with sales down, the market cooling dramatically and active listings up by 22 per cent compared with last year, multiple offers continue in some highly sought-after areas.

While houses sit on the market longer with more inventory available in the Greater Toronto Area, most of the multiple offers are taking place in pockets of the central city still coveted by buyers. But under-listing properties has created a backlash, not just among frustrated consumers, but also from some agents who say the practice is undermining the profession.

“Underpricing a home to create an auction-like frenzy started on really great homes in nice neighbourhoods,” realtor Sally Cook says. “Now everyone is doing it on any old piece of crap.”

“It’s detrimental to the seller. You might have 19 bids, but only two people can really afford the house, because you’ve attracted everyone else who can’t with a lower listing, so it’s completely artificial,” Cook says. “And of course the house is going to sell over asking ““ because it’s underpriced in the first place.”

The Toronto Real Estate Board, meanwhile, says there’s little it can do to restrict the listing price an agent might place on a property.

“Auctions, bidding wars and the various ways of marketing properties are driven by the marketplace,” board president Maureen O’Neill said in a written response to questions by the Toronto Star. “TREB (and others) do not have the right to interfere with a market-driven function.”

See the full story in the Toronto Star »