Overbidding vs Underbidding

By Shawn Lackie

I had to laugh at a recent headline, in one of the on-line, so-called expert, sites, regarding Real Estate. The BIG NEWS was, “Underbidding” was back and prevalent in many GTA neighbourhoods.

Underbidding? Since when did THAT become an issue? Like, when someone is asking $1.2 Million for a property and you have the temerity to offer them $1.1 Million? Excuse me, but isn’t that what used to be considered the norm? A seller lists a home for X dollars. The buyer sees the home and puts in an offer of their version of X dollars. Now it is up to the realtors to come to a mutual agreement which sees both parties are relatively satisfied with the outcome. The seller sells the home for considerably more, than they paid for 10 years ago, in most cases. The buyer gets to live in the area they have always wanted to live within. So both sides are happy, right? Still, a funny thing happened five years ago which was probably brewing for many years before that.

Check out this stat from Europe: According to Eurostat, house prices in the EU rose by an average of 5.4 percent, year-on-year, in the second quarter of 2025. Seven countries recorded increases of more than 10 percent, with Portugal (17.1 percent), Bulgaria (15.5 percent), and Hungary (15.1 percent) recording the strongest growth. Croatia (13.2 percent), Spain (12.8 percent), Slovakia (11.3 percent) and Czechia (10.5 percent) also posted double-digit increases.

So, it would stand to reason, there was an expectation in Canada to constantly see home prices rise. I get that, but it used to take about 10 years to see your home appreciate by $100,000 or more. Average yearly increase was around 10K, then the madness hit and messed everything up. So the market has been trying desperately to correct itself, over the last two years, and maybe more. I’ve said, before the last time, there was a softening like this, from 1989 to 1998, and it looks like we could be headed that way, again.

So what is with all this bleating about underbidding? Isn’t it just a return to what used to be a normal process? Isn’t that part of the whole negotiation which is an integral part of deal making? We are not in 2020, where agents with no clue were just throwing 'For Sale' signs on properties and letting the buyers determine the value of the home, through their offers. I am sorry to say, but, agents now have to do some homework and come up with a reasonable asking price for a home. In most cases the buyer will still want to offer less. That’s what they do. Both parties can then agree (or not) on an equitable sale price, and voila, you have a deal. To undermine and pooh pooh, “Underbidding,” as a phrase, is really silly and just one more media angle to glorify or sully the business. Funny thing, how many regular real estate columnists were doing their thing, on a regular basis, 40 years ago? Yup, pretty much, zero. It’s like the wild craze for Sports TV columnists in the 80s and 90s. Where are they now? However, Real Estate always has been, and always will be a popular water cooler (or party) conversation. Which is good, as long as they keep the facts straight.

Feel free to check out this story and more on my blog site, at https://slackie14.wixsite.com/buy-sell-and-more