For a 100-year-old, the east Vancouver denizen doesn’t look too bad.
The bone structure is solid, but the skin is sagging and more than a bit of plastic surgery is required. There are a few screws loose, too.
The house near East 5th and Victoria is a fixer-upper, but that didn’t stop someone this week from paying $800,000 -$151,000 more than the list price -after a fierce bidding war for the property.
The scenario is playing out across Vancouver in hot neighbourhoods such as Mount Pleasant, Commercial Drive and Strathcona as buyers contend with tight supply, as well as with looming amortization changes and interest rate hikes.
Throw into the mix homebuyers who held off purchasing last year and it’s fuelling a “pretty crazy” market, said Rick Stonehouse, a realtor who specializes in east Vancouver.
“It’s been a very unusual beginning to the year,” said Stonehouse, whose clients -a young professional couple -offered $766,000 for the house.
There were 20 offers, according to the listing agent.
The ramshackle place has a garage that leans to one side, missing shingles, a decrepit kitchen and an untamed yard. On the plus side, it has nice views, large bedrooms and an original fir floor.
Still, the high sale price had Stonehouse scratching his head. It didn’t take long this year for the market to get overheated, either -one property that was listed at about $1.1 million sold for $1.6 million in early January.
It’s quite a contrast to late last year, when “you could just feel the brakes coming on” starting in September, Stonehouse said.
Realtor Selina Jansen, who also had a client bidding on the house, says artificially low list prices are fuelling the bidding “frenzy.”
“Some people are notorious for it, and I think other people are now copying them because they’re having so much success with it,” she said.
Jansen’s client offered $711,000 for the East 5th house, one of three unsuccessful offers in the space of a week. In the others, her client -a professional woman -bid $811,000 for a house at East 14th and Knight that was listed at $789,000 and sold for $860,000. A home on Aubrey Place was listed at $749,000 and later taken off the market despite bids exceeding $800,000.
Mortgage broker Angela Calla of Dominion Lending Centre says bidding wars are dangerous because of the tendency for emotion to trump reason, resulting in the buyer paying more than what the lender determines its worth.
“Borrowers have got caught up in bidding wars like that when they focus too much on the emotional aspect and not really the fundamentals,” she said.
Knowing the assessed value of the property is an important piece of research, Calla said.
People entering a bidding war should also set a ceiling of what they can comfortably afford -and be prepared to walk away if it’s exceeded. Homes that are the subject of bidding wars often require work, so homebuyers should include renovation costs in their calculations, she advised.
Those bidding on a property also need to make sure the closing date falls within their preapproval window to ensure the lowest possible interest rate, she said.