Do you need an agent for a bidding war?

April 22, 2011


Mark Weisleder

More people are trying to sell their homes by themselves, either through sale by owner systems or by using an agent to post their information onto the MLS system for a fee and then not using the agent for anything else. One question is whether these private sellers can take advantage of the many bidding wars, especially in the Toronto area, that are diving selling prices above asking. Private sellers wonder whether they can create the same atmosphere. I think the answer is no.
I suspect that sellers who successfully sold their home after a bidding war were represented by a real estate agent. Here’s why:
1.Agents have marketing strategies, designed to create excitement about a property. For example, a property may be advertised, but no offers considered until after a specific date, to let as people as possible see the home. This recently occurred at a home for sale at 30 Yorkshire Rd., in Toronto.
The property was listed for sale by Brenda Seymour of Sutton Group Heritage Realty on April 7, 2011. The offer price was $325,000. On the MLS system it said: “Offers gratefully accepted at 7 pm on April 11, 2011. Please register all offers by 5 pm. Deposit certified cheque/Bank Draft requested.
On April 11, 13 offers were received and the property sold that night for $360,000. Private sellers have a very difficult time creating this type of marketing demand.
2.Many agents will recommend home staging, to make the home appeal to the widest number of potential buyers. Private sellers often mistakenly believe that their own personal style and taste is enough.
3.When an agent handles the bidding, they have strict confidentiality requirements. No offer price can be shared with other buyers. There is an equal chance for buyers to succeed. A private seller does not have this obligation. They can show a buyer’s offer to anyone else. As a result, buyers are very wary of competing on this type of property.
4.An agent will often recommend that the seller sign a disclosure statement about the condition of the property or do a pre-listing home inspection and make the report available to interested buyers. This demonstrates integrity and assists in putting the buyers’ mind at ease that they will not discover problems with the home after closing. Private sellers are often told by their lawyers that they should not sign any type of disclosure statement about the condition of their properties as it might entangle them in litigation. What the lawyers don’t explain is that when you make no disclosure, buyers will not trust the seller and thus either shy away from the property or more importantly, offer less money. In addition, they will be hesitant to participate in any bidding war.
When you sell by yourself, you may in fact save money on real estate commission. Yet if your net price is less than what you could have received if the property was properly marketed, then is this really a good deal for you? What many sellers have always known is that when you use the right agent to sell your property, your chances of obtaining more money is much higher.
If you have sold a property by yourself and were successful in selling your property for over the asking price through a bidding war, I would like to hear from you and find out how you did it.
Also read:
Buying a home: 10 things to know
Is selling you home by yourself a good idea.
Mark Weisleder is a lawyer, author and speaker to the real estate industry. If you have any questions about real estate issues, email mark at mark@markweisleder.com