Have you bought Bitcoin lately? Gambled on Gamestop? Rolled the dice on lottery tickets? Or perhaps you’ve decided to try your hand at some residential real estate in central Toronto? Because it’s been almost as unpredictable.

It’s one thing to take a risk on a lottery ticket or a small investment, but quite another to do so with what’s likely your largest asset. You never want to pay too much or sell for too little. Those can be very costly mistakes. And in a fast-paced, volatile market like this, those mistakes become easier to make and more costly, thereby adding additional stress to the already stressful process of buying or selling your home. (That’s why I wrote The Two BIGGEST Mistakes People Make – to help you avoid making big mistakes.)

Very few people like a market that’s as volatile and unpredictable as this one. Buyers find bidding wars stressful and disappointing. Realtors find it difficult to advise their clients about prices because prices are all over the place. Only sellers who sell their homes for way more than market value like this market and there are fewer of those sellers than you think. Most people prefer a steady, balanced market with more certainty so they can make proper decisions.

When the market gets like this, it’s natural to look for who to blame. Well, I’ve got news for you. There’s plenty of blame to go around. Let’s look at who might share part of the blame.

Sellers

Sellers sometimes price their homes at ridiculously low list prices that can be misleading. They can also say they’ll look at offers on the offer date and then look at an early bully offer. But these sellers may not be to blame. They may just be following their Realtors’ advice because they want to get as much money as possible for their homes. Can we blame them for that? I don’t think we can, but I think we CAN blame them for not acting in the most upfront manner even if they’re not breaking any rules.

Buyers

Buyers sometimes pay ridiculously high prices that aren’t supported by market data. Some of them also jump the queue by making bully offers when sellers say they want to wait until the offer date. Are these buyers to blame? In most cases, I don’t think so. It’s their money and they’re free to spend it however they like. And if they’re not breaking any rules, isn’t it alright for them to do what they can to buy their dream homes in such a competitive market?

The Banks

Banks are lending money at such low rates it’s almost free. That’s one of the reasons some buyers don’t hesitate to borrow more so they can pay higher prices. But banks are in business to make money for their shareholders. And judging by their share prices, they seem to be doing a good job of that so if they want to lend money at such low rates it’s hard to argue with them.

The Federal Government

The Federal Government sets the rate that sets the banks’ lending rates. So perhaps the Federal Government is partially to blame for the “almost free money”? I don’t think so. The rates set by the Federal Government are about much more than mortgage rates. They’re about the economy as a whole and take into account what’s going on all around the world. If we want to blame the Federal Government we may as well blame ourselves because we voted the government in.

Real Estate Industry Regulators

These are the bodies that set the rules for how the real estate industry operates. So when bully offers or low list prices or bidding wars are permitted and aren’t subject to more comprehensive rules and regulations, it’s because that’s the way these bodies think they should be. These bodies have to balance the need to keep the market competitive with the need to protect the consumer. It’s not an easy job. But I do think the real estate market could use more guidance and rules in certain areas.

Capitalism

Yes, capitalism might share some of the blame, too. Residential real estate is traded like any other commodity in our free market economy. It’s all about supply and demand. Do we want more government regulation of the real estate market? Do we want to change our entire economic model? Maybe yes and probably not. Let’s not blame capitalism.

Realtors

Aaaaaahhhh, yes, Realtors. Bet you thought I was going to sweep this one under the rug. How could I? I hear more complaints about Realtors than about all the other potential villains combined. Here are a few:

• Realtors set low list prices to knowingly mislead buyers. That’s simply not true. Realtors may advise their seller clients to set a low list price in an effort to produce the highest possible sale price. There’s nothing against the rules in doing that plus it’s our job. Besides, we don’t set the list price. The seller does. And it’s the job of the buyer and the buyer’s Realtor to educate themselves so they know the true value of the property and don’t get mislead by a low list price. Having said this, if it was up to me, low list prices wouldn’t be permitted.
• Realtors create bidding wars to drive prices up. Once again, it’s the Realtor’s job to help the seller get the highest price possible. If more than one buyer wants to bid on a property it’s not for the seller’s Realtor to stop them. This is how supply and demand work in a free market economy.
• Realtors give their buyer clients advice that makes them pay too much. This is possible. Realtors come in all different shapes and sizes with all different levels of experience and expertise. But it’s up to the buyer to choose a Realtor who will give them the best advice possible so they don’t pay too much unless they themselves decide they want to pay too much. (This happens more often than you’d think. Buyers say “I can afford it and I really want it so I’m going to pay for it”.)
• Realtors hype their buyer clients up to get them to pay higher prices. Maybe sometimes. But the Realtors are just helping their clients achieve the goal of buying their dream home. In other words, the Realtors are doing exactly what they were hired to do. Besides, no one is forcing the buyers to pay a certain price. It’s entirely up to them.
• Realtors engage in shady practices during offer negotiations to get a buyer to pay more or a seller to accept less. I’ve never witnessed this firsthand, but I know it’s possible. Our industry would benefit from more guidance and regulation, in my opinion. The frequency with which ill deeds occur is likely much lower than it appears, but there are certain practices in our industry which create perceptions of shady practices where none exist.

So what’s the verdict? Who’s to blame for this market? I’d say everyone plays a role in making this market what it is today, some more than others. But at the end of the day, this is the type of society we live in and this is the type of economy we have. We’re all just people doing the best we can. So we have to live with what we have. At least for now.

But as I always say, YOU have the option to hire a top notch Realtor to help you. Someone with the expertise and experience to guide you through these stormy seas. It’s the best thing you’ll ever do when it comes to avoiding mistakes. And you won’t need to blame anyone because everything will work out well for you. So if you don’t hire the right Realtor and things don’t work out the way you want, is there anyone to blame other than yourself?