For a seller, the obvious allure of an unconditional offer is the certainty which it immediately provides.

In the past, unconditional offers were typically made in rare instances when the buyer has the resources to finance the purchase themselves and does not require anyone’s approval. Today, we see many buyers submitting offers that contain no “subject to mortgage approval” clause in spite of the fact that they will clearly require a mortgage approval to complete the purchase of your home.

In this particular market, unconditional offers are being made in an effort to create an advantage for buyers when they are competing with other offers. It’s a gutsy move on the buyer’s part. Sellers should be aware that in most cases there are limited benefits to them in taking this kind of offer seriously. In fact, you may be accepting more risk than you ever imagined. You need to understand that at the end of the day, you still have a sale which is conditional upon the buyer receiving a mortgage approval. If a lender won’t lend the buyer the funds they won’t be buying your home. It really is that simple.

When a buyer appropriately includes the “subject to mortgage approval” clause there’s a short term “out” for the seller. If the buyer is unable to obtain the financing you can move forward with your selling effort, normally within a short period of time. In this particular market, you can likely expect your home to attract a level of interest which is similar to what you experience the first time it was offered for sale. The risk of accepting a finance condition is pretty limited and almost inconsequential.

Consider this; a buyer offers to purchase your home without a mortgage condition in spite of the fact that they’ll require mortgage approval. They provide a ten thousand dollar deposit. You’re happy.

The buyer then proceeds to see his lender and based on some change in his financial situation, or something which he failed to disclose to the lender during his initial “pre-approval” process he is rejected by the lender.

The buyer is distraught realizing that’s he has likely made a move which will ultimately cost him $10,000.He’s not ready to give up and decides that he is going to try to arrange to finance some other way. Whether he chooses to tell you about his misfortune today, or 60 days down the road, the same $10,000 is at stake, so there is little incentive which might cause him to come forward so you can deal with a collapsed sale and move forward with your plans.

Meantime, possession date on the home which you’ve purchased draws near. Perhaps you’ve obtained bridge financing which would allow you to possess both homes for a short period of time so that you can move directly from one house to the other. As soon as the sale on your first home completes you’ll pay the lender out of the proceeds. The trouble is, your home sale doesn’t close and suddenly you own two homes, and two mortgages. Ouch!

Now, you might say, “At least I’ve got the $10,000 deposit. That will be helpful in dealing with this mess.”Yes, if the buyer should agree to surrender that money you’ll probably be able to find your way out of it. You should be aware however that there is a provision in the Real Estate Act that forbids a real estate brokerage from releasing a deposit which is “subject to dispute.” If the buyer objects to its release, the deposit is staying right where it is until the matter is settled.

Clearly, this would be a sleazy approach for a buyer to take and I believe that contracts which we use in Saskatchewan would ultimately entitle you to the deposit, but you might have to drag this bum to court to make that happen and that can be a lengthy, costly and onerous process. The buyer could try other sleazy tactics like filing an interest in your property with the Land Titles Office making it difficult for you to sell it to someone else. These tactics would be used as a way of strong-arming you into returning all or part of the deposit.I would say that the larger the deposit the more likely it is that a buyer will throw down the gloves and fight.

I know of one instance where a buyer changed their minds on a purchase after removing all conditions. They flew back home to England and they used the very tactics which I just described. The seller had to jump through all sorts of hoops to get their home back on the market and it has been difficult locating these people to serve them with a summons. The sale fell through over two years ago. The seller will have her day in court this May. The deposit was a mere $5,000 which clearly tells me that some people will do just about anything to try to save a buck.

Sellers beware!

I’m always happy to answer your Saskatoon real estate questions. 

Norm Fisher

Royal LePage Vidorra

Saskatchewan Premier Lorne Calvert says that his government is “gearing up” for another advertising blitz in Alberta to promote our province as a great place to live, according to a front-page story in today’s Star Phoenix.

While it’s hard to argue that a province shouldn’t promote its benefits abroad, someone seems to be unaware of the fact that Saskatoon home buyers are reaching their wit's end trying to find a good home to buy. Many have made offers on a number of properties, often tens of thousands of dollars above the asking price, and they still find no love.

MLS® housing inventory dropped to a critically low level of approximately 250 listings by the end of 2006. Today there are 249 single-family homes and condos on the system, most of those already conditionally sold. We’re seeing sharp price increases in every category of housing with some increasing as much as 70% since the start of the year.

My question to Mr. Calvert? Where are we going to put them when they get here sir?

Somehow, it just seems like the wrong time to be “gearing up” with this particular campaign. Let’s hope that the government updates its creative message, at the very least. Premier Calvert’s claim, “If you have any home ownership in Calgary these days, you can sell here, buy a home in Saskatchewan and be free and clear with your mortgage, likely own a cottage, and maybe one of two rental properties” is getting a little old.

I’m always happy to answer your Saskatoon real estate questions. 

Norm Fisher

Royal LePage Vidorra

Dwight Percy has an interesting article in the business section of today’s Star Phoenix titled, “High local housing prices are still below average” which is definitely worth reading.

Percy points out that while Saskatoon house prices have seen sharp increases over the last quarter, local homes are still trading well below the national average of $294,880 reported by the Canadian Real Estate Association at the end of February. The average selling price of a Saskatoon home topped $200,000 for the first time in March.

He asks, “Does it make any degree of sense that this market sits at only about two-thirds of the Canadian average?”

He makes some interesting points. If his prediction is accurate, the average price of a Saskatoon home will have doubled in just two years. The idea may have seemed outrageous just a few months ago but one now has to wonder given the momentum which this market seems to have. Consider that the averages we’re seeing now are likely skewed down by a large amount of activity in the entry-level condo and house market and the possibility seems even more realistic. It seems to me that there are a large number of pretty “average” homes trading at or above the quarter-million-dollar mark already.

I’m always happy to answer your Saskatoon real estate questions. 

Norm Fisher

Royal LePage Vidorra

The “2007 Royal LePage Female Buyers Report” was released this morning.   The report which marries findings from a national consumer poll with anecdotal research examines the buying habits of Canadian women.  Among some of the findings, the report found that women are playing an increasingly significant role in the real estate market.  In fact, of single women who are not yet homeowners, 31 percent say they will potentially purchase their next home within three years and 30 percent already own.

With a cheque book firmly in one hand and a hammer confidently in the other single female homebuyers of all ages continue to knock down barriers by purchasing real estate and tackling home repairs. Currently, 30 percent of single, never-before married women own their own home, while 45 percent of divorced or separated women and 64 percent of widowed women are homeowners, according to the Royal LePage Female Buyers Report released today.

Read the entire report here.

I’m always happy to answer your Saskatoon real estate questions. 

Norm Fisher

Royal LePage Vidorra

The Saskatoon real estate market took off like a rocket in March producing bidding wars that can only be described as ridiculous for anyone who has been working in this business for any amount of time. By month-end, almost 65% of properties sold were selling at, or above the list price. Average overbids were coming in around the $15,000 range and buyers were lining up to throw money at home sellers. An unfortunate sense of desperation hung thick as newcomers, first-time buyers and investors scrambled for a piece of the action.

Average selling times slid once again to just 16 days and the average price of a Saskatoon home (condo and single-family detached combined) took an incredible leap forward from $188,028 in February to $203,065 in March, marking the first time that the average ever topped $200,000 in Saskatoon.

An incredible 295 houses traded hands, at an average of $6,000 above the asking price. The average selling prices for Saskatoon houses jumped to $208,123 from $194,360 the month before.

The condo market produced 93 sales. Virtually everything that was offered for sale was subject to offers quickly. The average selling price spiked again to an unbelievable $189,275 from $158,924. Average selling prices exceeded average list prices by more than $11,000.

Considering that the average was below $145,000 in December, this is truly difficult to fathom. Condo prices are appreciating much quicker than house prices, which also feel out of control, and I expect that we’ll see some kind of correction between these two categories. I suspect this is happening because larger numbers of people are trying to get into the market at this more affordable entry-level.

I’m always happy to answer your Saskatoon real estate questions. 

Norm Fisher

Royal LePage Vidorra

It’s never been harder to predict the probable selling price of a home in the Saskatoon real estate market. At most points in my career, it’s been reasonably easy to come pretty close with a little prudent research. Now, things seem to be changing so rapidly that it’s hard to answer the question with a great deal of confidence when a seller asks, “What can I get for my house?”

Take comfort in the fact that if a home is properly marketed and given good exposure to home buyers, the price which you ask is almost inconsequential, as long as it’s not too high. What’s most comforting is that if you price your home very attractively, you may, in fact, get far more than you ever expected you might.

A recent experience which I had with one of my clients is a perfect example of how price can impact results. I share it with you with their permission.

Joe and Sally (not their real names) wanted to sell their home. As prudent home sellers, they decided to interview three agents for the job. During my time with them, I stressed the importance of selecting an agent based on services and marketing strategy and I asked them to try to focus on those things in making their selection, and not on the agent’s “price.”

Sometimes, agents will tell a seller almost anything to secure a listing hoping that they may eventually convince the seller to reduce it to a reasonable and marketable price. I refuse to do this. Invariably, it costs the seller something, if not a lower sale price, certainly some lost time and frustration. An agent has a responsibility to provide his or her best advice, even if it’s something the client would rather not hear. At the heart of an agency relationship is the principle, “protect and promote the client’s interests” and that begins with the truth.

The first agent that Joe and Sally interviewed suggested that the home’s value was “somewhere between $155,000 and $165,000.”They were left feeling disappointed as they had hoped they could get more. This agent later revised his suggested list price to $199,900 after researching the market further.

When I met them I explained the complexities of pricing real estate today. I told them that I couldn’t be sure how much we could get, but I proposed a strategy that I thought would deliver a top-dollar sale. I knew full well that the first price proposed was too low. Even the most aggressive buyer is only willing to go so far over list price, and a price that is too low can cause buyers to be suspicious and to wonder what’s wrong with the home. I felt the home could look very attractive at $20,000 above this agent’s high range. I suggested that we price the home at $184,900 and I felt confident that it would attract offers above the list price.

The next agent whom they met with suggested a list price that was somewhere above the $210,000 mark. Joe and Sally even felt that the suggested price was “too high” but like all home sellers, they hoped to maximize their return on resale. For the record, I’m not suggesting that this agent was in any way underhanded in his suggestion. Sometimes, it’s simply an honest overestimation of the market’s potential, something all agents have done, and what I suspect probably happened here. As I said, it is difficult right now to nail that perfect price.

You can probably appreciate that Joe and Sally’s day was getting better with each agent they interviewed. They’d gone from $155,000 to $210,000 plus in just a couple of hours. Confused, they decided to interview a fourth agent the following week. That agent suggested a price of $197,000, making my suggested list price the lowest of the four.

When all was said and done, Joe and Sally decided to list their property with the agent who suggested the highest price. They talked him down a bit and the home went on the market at $209,900.The property was listed for two full weeks and during that time many people came to see it. Their agent diligently worked the listing hosting two open houses. Thirty-eight groups of people attended the first one, but soon traffic began to dwindle to “two or three showings each day.”A couple of people made verbal offers both of which were substantially below list. At one point a decent written offer was accepted but ultimately, the buyer failed to remove conditions and the listing expired without success.

I was surprised but very pleased to hear from Joe. When I got the call he asked, “Would you like to list our house?”

“Yes, I would,” I said and a meeting was scheduled to get the home back on the market.

This time, I proposed a listing price of $189,900.It was two weeks later and things had changed some. Again, I was confident that with such a price I good generate lots of interest and in all likelihood present offers above the list price. It took some trust on their part to approve this number as it was a lower price than the offer they had received, and even though it hadn’t completed, I’m sure that the offer price had become the benchmark by which they would judge any future offer. Further, it was still well below the price which was suggested by all of the other agents they interviewed. They decided to trust me and I listed the home at the proposed price.

I began with the usual process of preparing my marketing materials including feature sheets, virtual tours, and an internet ad. Before I placed the home on the MLS®, I emailed it to over 300 agents and invited them to schedule a showing for this home which would be available the following day.B y the end of the day, I had booked about a dozen showings. The following morning I placed the home on the MLS® and the telephone continued to ring and more showings were scheduled. Over thirty prospective buyers went through the home that day, and by the time I met with Joe and Sally later that evening I had seven offers to show them.

Joe and Sally accepted an offer that evening which significantly exceeded the original asking price of $209,900 (by enough to buy some pretty cool stuff) and the sale has since firmed up.

During the previous listing, the buyers called all the shots. They know that the Saskatoon housing market is hotter than it’s ever been and they were probably suspicious that this home had not sold quickly as most others have. Nobody is excited about paying top dollar for a home that nobody else seems really interested in. A lukewarm buyer can be difficult to deal with. Whatever the case, the price at that time was not causing them to really want this lovely house.

On the other hand, our new price created some excitement. Buyers were nearly tripping over each other during that first day of showings and it was totally obvious to everyone who came by that this home was attracting interest and would likely sell today. Buyers came to the table with their very best offer. In fact, if we had four homes just like it, they all would have sold above the previous list price. That’s right; four of those seven offers were above $209,900.

This is a pricing strategy that I’ve used with great success since this bull market began; generating offers that exceed the asking price by as much as 20%.

When you price your home, you’ll want to take some care that you’re not too low, but be particularly careful that you’re not too high. An attractive price that ensures buyer interest is just as important in a hot market as it is in a balanced one.

I’m always happy to answer your Saskatoon real estate questions. 

Norm Fisher

Royal LePage Vidorra