house price rising

[Pda]

hi, is there a regulation at which property price can be listed on mls. I have seen real-estate market in Mississauga is so hot that people are putting prices too high... if someone does not have a good knowledge of house market and purchases a over priced house what happens next. Will bank give him mortgage on over price house or he has to put more down payment. I also like to know if a house get oversold in fluke what happens to the housing market. will the next house in that street be eligible to sell at that market price if his neighboring house got oversold.

 

[scylla]

No - there is no regulation for the property prices listed on mls. If someone doesn't have a good knowledge of the housing market and purchases an over priced house - then they own the house and have to pay for it. (This is why it's a good idea to work with a real estate agent.) Whether the bank will give him more money for the mortgage depends on how much he qualifies for. This is why it's extremely important to understand how much of a mortgage the bank will approve you for and not to go over this maximum amount when you purchase a house. You need to your bank in advance (before bidding on a house).

It's impossible to answer your question about what will happen to the house down the street if another house sells over the offering price.

 

[steaky]

No - there is no regulation for the property prices listed on mls. If someone doesn't have a good knowledge of the housing market and purchases an over priced house - then they own the house and have to pay for it. (This is why it's a good idea to work with a real estate agent.) Whether the bank will give him more money for the mortgage depends on how much he qualifies for. This is why it's extremely important to understand how much of a mortgage the bank will approve you for and not to go over this maximum amount when you purchase a house. You need to your bank in advance (before bidding on a house).

Sometimes when you hire a real estate agent, you still had to pay to own an overpriced house. After all, you are paying indirectly the commission to your real estate agent. If the sales prices got higher, then he gets more commission. You can apply for a pre approval from your bank, so that you know how much you can afford.

Also you can try to sell the overpriced house before closing for a quick profit (or small loss) if the market is still hot.

It's impossible to answer your question about what will happen to the house down the street if another house sells over the offering price.

A friend of mine was in similar situation several months ago. Two condos of the same size, same views, but different floors of the same building were in the housing market. The lower floor condo got multiple offers and sold way over the MLS price. This result is that the other condo had to adjust its original listing price and sell at a higher price.

 

[Pda]

how people are affording house if the monthly mortgage amount goes over rental value.
I did a small math.. if someone buys a property for 500K at 2.5% @ 25 years amortization with a down payment of 20% ( lets assume he uses separate saving of 7 to 8 K in closing). his monthly mortgage comes around 1680. Ones he owns the house he need to pay house tax/utilities etc which is around 350. In total he is now paying 1680 + 350 = 2030. And monthly other maintenance like grass cut. snow removal/minor repairs. Add another 50. so it become 2080. so lets say he was living in condo with all inclusive any paying 1450. now he has to pay 630 on top and his monthly salary is still same..

Then what temps people to buy overprice house.

I also did another math for every 25K price increase over 50K the monthly amount added to mortgage is $90. meaning if you buy a house 50K over asking then you are increasing your mortgage by $180.

any real estate person here like to add their opinion on this matter. I like to know things from different persons perspective... a person earning 50-60K may have different thinking then person earning 70-80K and someone in real estate as agent might think differently ...

 

[steaky]

Then what temps people to buy overprice house.

I have been hearing people say house in Canada being overpriced nearly for one decade. It's like if you don't feel to buy and own a house say 8 years ago, which one house in that neighborhood is selling for $650,000, then 3 years ago, a neighboring house sell for about $800,000 and now the selling range for houses in that neighborhood is about 1.2 to 1.5 million. It looks like if you hesitate to buy a house 3 years ago, you wouldn't buy now and you would never own your home sweet home.

And there are always overseas and local buyers who don't do the maths!

 

[scylla]

I have been hearing people say house in Canada being overpriced nearly for one decade.

Ha ha - no kidding. My husband and I sold our loft and bought a house in downtown Toronto in 2012 and we thought we were buying at the top of the market. Turns out - nope.

 

[Pda]

So is it suggested or wise to buy house over asking price or if asking price is already high whats the point in buying as mortgage will go high and i dont think market will double next year.

 

[steaky]

So is it suggested or wise to buy house over asking price or if asking price is already high whats the point in buying as mortgage will go high and i dont think market will double next year.

There are no direct relations between mortgage rates and property prices.

It really depends on the market to decide whether to buy house over asking prices. Sometimes when you offer to buy a house at a price higher than asking, someone still beat you and took the bid.

 

[scylla]

So is it suggested or wise to buy house over asking price or if asking price is already high

It depends who you ask. Some say the market will keep going up, some say prices will stay flat and some say they will go down. There's no magic right answer. That's not how real estate works.

 

[Pda]

I like to know is it possible to give an offer below listed price. Lets say seller puts the house over priced and list above market rate can the buyer give offer based on what they think should be market rate.

 

[2muchofwait]

I like to know is it possible to give an offer below listed price. Lets say seller puts the house over priced and list above market rate can the buyer give offer based on what they think should be market rate.

Hi pda,

Let me present to you a scenario which I think you might be missing...If a house is sold over asking it does not mean house is sold over market price. You might be confused how I am saying this, let me clarify for you - see if the average selling price of a similar house in neighbourhood is suppose 725k then sometimes the real estate agent or seller might plan to list it for 699k to attract more customers because mostly people use filters like maximum price 700k while searching for buying a house so now this house will come in their list and they will most likely like it then the real estate agent will tell the buyer that avg selling price on this street is 725 so it is actually attractively priced this increases the interest of buyer more so he comes to the bidding of that house and if he likes the house too much there are chances he might arrange few extra grands for buying the house at maybe 730k so now when you will know that the house was sold 31k above asking, you will think somebody bought 31k over market price but fact will be that it got sold only 6k over and above the previous sale which I would say is otherwise also normal appreciation between the time of 2 sales. Hope I am able to give you an idea what I am talking about. It is only through using a real estate agent (like me) who will explain you all these factors before or after viewing a particular house and also by spending time digging in each listing for customer's benefit.

Also let me answer your above question, in above scenario if you (buyer) tells his agent to present an offer of 675k against list price of 699k he will most probably tell you that your offer will be out rightly rejected by seller or seller agent BUT if you still want me to present them this offer then Yes you can offer below list price but in case the seller agent is taking multiple offers at a same time chances are you have lost the race even before it started or if by any chance there are no offers there is a chance you might get below list price(which obviously is remote because most people will be listing the property around market price to get maximum bids.

Hope this answers your question you as an buyer can offer any price over as well as lower list price and same way seller can if he wants to list say 50k above avg market price but that can only be analysed by real estate agent because without an agent you(buyer) don't have access to all info like last sales on same street.

 

[scylla]

I like to know is it possible to give an offer below listed price. Lets say seller puts the house over priced and list above market rate can the buyer give offer based on what they think should be market rate.

Sure - you can register whatever offer you want. Doesn't mean it will be accepted - especially in this market. Just because you think something is overpriced doesn't mean everyone else does.

Understand that the prices you see on realtor.ca/mls aren't the sale prices - they are the asking prices. Many properties are going over asking these days because (as 2muchofwait has described above), agents are listing them below market to attract more bids. In my neighbourhood, it's very normal for a house to go $100k-$300K over the asking price listed on realtor.ca.

I would very strong recommend you work with a good real estate agent - you don't seem to have a very good understanding of how things work here.

 

[BonManush]

Sure - you can register whatever offer you want. Doesn't mean it will be accepted - especially in this market. Just because you think something is overpriced doesn't mean everyone else does.

Understand that the prices you see on realtor.ca/mls aren't the sale prices - they are the asking prices. Many properties are going over asking these days because (as 2muchofwait has described above), agents are listing them below market to attract more bids. In my neighbourhood, it's very normal for a house to go $100k-$300K over the asking price listed on realtor.ca.

I would very strong recommend you work with a good real estate agent - you don't seem to have a very good understanding of how things work here.

+1

 

[COPRQuestion]

The original post seems rather strange and honestly if you don't understand the way property works then you really need to get some professional advice.

This is a pure case of supply and demand and what people are willing to pay. Just because the houses on a street look the same and are the same layout doesn't mean that they will go for exactly the same price.

And I'm afraid there's no rule that says if my neighbor sold for 1 m but i bought for 1.2m then the guy who sold my property to me owes be 200k back.

I live in HK and if you want to see some expensive property per sq ft come on over and take a look, it will make your eyes water