How saving $240 dollars resulted in costing me $270,000 in the Okanagan Real Estate Market
How Saving $200 cost me $100’s of thousands of dollars.
We are seeing changes on the horizon. Although the market has gone from white-hot back down to red hot, with June’s interest rate hike we are predicting stats moving very slowly to a balanced market. For us, what that currently looks like is, that instead of getting 12-14 offers per home we are selling, we are now getting 2-4 offers per home on many of our listings. With a continued shortage of inventory coupled with the interest rate hike in June, this may cool the summer buying season slightly but the market will still be a seller’s market.
Interestingly, with over 70 homes that we have sold with multiple offer situations, we are still noticing a strange trend.
Right before all offers are required to be submitted on each of our North Okanagan listings, we are inundated with calls from agents wanting to put their offer in last and trying to gauge the market based on the number of offers we anticipate we will receive.
I find this is a dangerous short-sighted precedent that agents are setting for their buyers. Essentially, what these agents and their buyers are trying to do, is guess the lowest price they can submit based on the number of offers we are anticipating will be submitted.
Although it is important to ensure you watch every dollar your buyer spends and try and get them the best price, based on the number of offers, I have yet to see this strategy work. The reason being is there is always one outlier who decides they want the home very badly and they understand the future value of Vernon's real estate.
If you look over the past 24 years in Vernon, the home values have gone up a staggering 400%! So trying to save yourself a few thousand dollars on your family’s dream home, that you will live in for the next 9 years is not worth the risk. More importantly, if you lose, you are still back in the buyer’s pool with other buyers competing for the next home which may not be as nice as the first choice.
I, personally, learned this valuable lesson years ago when trying to purchase an investment property here in the Okanagan for rental purposes. We knew we would hold the property for more than 4 years and the rent would essentially break even. Like others, I was trying to pay as little as possible and my agent (before I was an Agent) was conservative and was giving me similar advice concerning not paying too much in competition with 7 other offers.
Instead of looking at the future value of the investment, I was trying to figure out how little I could pay while competing with these 7 other offers. In the end, I had the 2nd best offer by $240, meaning the person that purchased the home, had an offer of just $240 more than mine. The worst part was down deep inside I knew I could have added another $4000 plus to win the offer process but instead I lost out.
The worst part was that my short-sighted thinking cost me $270,000 over time, as the home appreciated that much over the next 4.5 years.
When in an offer situation on North Okanagan homes put your best offer in (especially if it is your dream home) knowing the returns in the Okanagan continue at rates of 4-7% year over year and even more as time goes by.
