With the current sellers market in Thunder Bay and pent up demand, home sellers are employing the strategy of "holding offers." This means that all offers received will be reviewed on a specific date and time, typically one week after the listing, which usually includes open houses. The aim of this offer presentation time is to create competition among buyers, as the seller anticipates receiving more than one offer on the offer date.

In this scenario, the asking price is only a starting point. The seller anticipates that the sale price will exceed the listing price, much like an auction where the listing price serves as the opening bid. This competitive environment creates a bidding war in a hot market, and the highest bidder usually wins the property.

However, buyers should exercise caution in this scenario and ensure that their agent knows the market value. Overpaying could lead to issues with a home appraisal from the lender. Moreover, buyers should be aware that they could receive a bully offer, also known as a pre-emptive offer.

As a seller, there are pros and cons to holding offers. Holding offers can yield top dollar and is most effective when there is a strong supply and demand imbalance, meaning many buyers and very few sellers. The sale price could exceed the market's price range as buyers compete with each other for this specific home. In Ontario, all bids are sealed, meaning buyers only know the number of offers and no other details, such as the offer amounts or conditions. This could potentially lead to buyers paying significantly more for a property than the next best offer due to the lack of information.

PROS:

One advantage of holding offers is that it can result in the highest possible sale price, especially when there are many buyers but few sellers. Even if the market has a general price range based on MLS listings, the actual sale price may exceed this range as buyers compete for a particular home.

In Ontario, all bids are sealed(this is changing in April 2023), meaning that buyers only know how many offers have been submitted, but not the specific details such as price, closing date, or whether the offer is conditional. As a result, buyers may end up overpaying for a home if they are unaware of the other offers.

CONS:

Sellers with this strategy need to show value to buyers so that you create a frenzied mentality. As mentioned, buyers have access to many tools these days like HouseSigma, where they can look at past prices. Listing your home at market value and holding offers is not likely to give you the sale price you’d want. This is because buyers don’t see value in competing for a home that’s already at market value. As an example: in a strong sellers market, a home is worth $300,000. The seller decides to list at the $290,000 price point and review offers after 7 days. The seller is hoping that the market will see value at $300,000, potentially bidding it up to over $330,000.

However, listing at $300,000 and holding offers may not be a good idea. It won’t provide buyers with the value they’re looking for and they may be reluctant to submit an offer. After all, they compete and don’t want to pay “too much”. Unfortunately first time home buyers are feeling the pinch. Many millennials are realizing the lowest priced homes seem to be the most competitive. In order to be competitive they need to drop some key offer components such as a home inspection or financing condition. Another major con of holding offers is the worst case scenario of not actually receiving any offers. Or, receiving offers that are less than desired. This strategy is often avoidable by listing at an appropriate price from the start. The risk of not getting an offer on offer day is not receiving a full price offer, sometimes 5-10 per cent less than asking. Working with Thunder Bay real estate agents that know the market is key here. Sometimes, other market forces could thwart the effectiveness of holding offers. This could be something simple such as a similar home coming on the market at the same time as yours.