Inevitably the question comes… “How many houses should I see before I buy one? How many houses should I see?” I hear this all the time, especially from first time buyers. There really is no right answer to the question – some buyers will offer on the first house they see, and other buyers take a more measured approach and need to see more. I have no problem with doing it either way, and I am happy to work with a buyer as long as they have genuine desire (and means) to purchase within a reasonable time period, and also as long as they don’t have halitosis.
However, when a buyer has seen 40 to 50 houses and still hasn’t made an offer I do have a problem. Questionable motivation aside, this drawn out approach of tire kicking (or whatever you want to call it) ultimately ends up costing the buyer money. The house on 123 Main St that cost $600k eight months ago now costs $640k – that’s just the hard reality of a Toronto market that went up 8.4% last year.
Indecisiveness can also force a buyer’s hand eventually, and not always in a good way. I had clients that purchased a house this past fall after an epic and drawn out search, and at the end of the day I knew for a fact that they didn’t love their house. Hell, they barely seemed to like it. But they were so indecisive for so long, and just couldn’t seem to step up to the plate. They passed on at least half a dozen houses they should have bought, and were far too timid on several offer nights for houses that were in their grasp. This went on and on, until finally they ran out of time. Living in a dingy basement apartment with 2 children, their marriage was under visible strain. After months and months, it became clear that if we didn’t find a house immediately they would be looking for a divorce lawyer and not a real estate lawyer. Finally, at the ass end of the fall market, our search came to a merciful end. On offer night, against 5 competing bids, I pushed them up to an uncomfortable place (which is what it takes) and they finally listened. We won, and given the circumstances I truly believe they got the best house available to them at that time. But it was not the house they envisioned, and I doubt it ever will be. But at least they are still married!
Now don’t get me wrong, there are instances where waiting a bit is better, and in fact holds strategic value. I will give you an example from this extreme inventory starved January. There was a house that sold recently on Osborne Ave (smallish 3 bed semi with lots of original character, nice but not NICE) in the Upper Beaches. The house itself was fine, but I wouldn’t have sent my buyers through it with a ten foot pole, even if they were giving out beer and chicken wings at the open house. Listed at $699k, it ultimately sold for $907k, at least $100k more than it would have if there was anything else remotely decent available that week. In this instance waiting a few weeks until there are more options is not only ok but completely advisable. Getting involved in a bidding war on a house with over 10 bids is not the way to go for a buyer, unless you like losing.
A recent listing I had is a great example of 2 different buyers and approaches. Let’s call them Buyers A and Buyers B.
I met Buyers A on the Sunday morning before the open house (they insisted it was best to see the house “in privacy”), and they had me smiling right from the get go. They showed up with a clipboard with a 3 page checklist and one of the longest showings I can remember began. It was 20 minutes before we even got into the house, and I was amazed at the minutiae of the checklist and their insistence on filling out each section. Finally we made it inside, where we spent an agonizingly long time. I’m not exaggerating when I say they spent more time than a home inspector would, and man did they have questions. It wouldn’t have surprised me if they wanted to know about the family tree of the guy that installed the windows 17 years ago. The FBI would be lucky to have them as interrogators. Finally we parted ways and they promised to be “in touch” after they thought things over. I could barely wait.
Buyers B walked into the tail end of what had been a fairly uneventful open house (isn’t that always the way, you sit there for an hour and 50 minutes googling old hockey stats and then right at the end your whale walks in). They were a nice couple in their mid 30’s with one daughter and another on the way. They were on a month to month rental in a condo (which was quite comfortable) and were aware of the rate at which prices were going up, but not overly concerned. Essentially they were keeping an eye on new listings but not actively looking. They hadn’t even planned to come to the open house but they happened to be walking by and saw the signs, and in they came. They quickly did a wordless walk through, and then went to the backyard for an animated discussion. Finally they came to see me in the kitchen and it was clear they had the “feeling” – that visceral and unmistakeable urge a buyer gets when they absolutely have to get the house. I sent them the home inspection, and the next evening we met at Starbucks to put together the paperwork. An hour later they had bought the house.
So is one approach better than the other? Maybe. Maybe not. But what I do know is that Buyers B are getting ready to move into their new house at the end of the month. And Buyers A are probably grilling the Starbucks barista about the composition of the new Flat White.