Driving around Toronto you’ll often see signs with realtors advertising how they’ve successfully sold a property for “over asking.”

The impression one could take from this is the city’s housing market is a seller’s paradise with long lines of potential homebuyers willing to outbid each other, driving prices up and sending sellers running gleefully to the bank.

But some new research suggests this perception may not match reality.

Curious to test out the notion that “over asking” sales are the norm or close to that and to learn why houses sell for over or under asking, Igor Dragovic, an urban land economist and licensed realtor, recently analyzed 4,230 home sales for January to November this year in a specific downtown Toronto area.

He found that only 29 per cent of homes sold over asking.

The vast majority of homes in west downtown — the area bounded by Bloor Street to the north, the waterfront to the south, Yonge Street to the east and the rail lines near Lansdowne Avenue to the west — sold at or under their listed price, Dragovic discovered.

“I was a lit bit surprised to see this in downtown west, generally a pretty hot pocket in housing right now,” Dragovic said in an interview.

He used data collected by the Toronto Real Estate Board, and compared specific neighbourhoods in the area.

The analysis also took in various housing types including semis, detached homes, condos and townhouses.

Dragovic found that the Bay Street corridor had the lowest percentage of homes selling over asking — 84 of the 610 units sold or 14 per cent, while neighbourhoods such as Dufferin Grove and Trinity Bellwoods, where more lowrise houses exist, are seeing about 50 per cent of homes selling for over asking. In Trinity Bellwoods for example, 76 homes sold at or under the listed price while 75 sold over.

In terms of housing types, semis, Dragovic found, ranked the highest in terms of homes selling over asking — 106 of 173 units (61 per cent).

Dragovic says he was “surprised” by the low rate of condos that sold for over asking — 90 of 208 condo townhouses (43 per cent) sold over asking, while 934 of 3,541 condo apartments (26 per cent) sold above asking.

He also took another approach to his analysis — looking at differences in listing and selling prices per square foot for homes in the downtown west block.

For his research, a total of 3,989 of the 4,230 of the home sales Dragovic analyzed included data on the square footage of the unit.

Comparing, for example, Trinity Bellwoods and the Bay Street corridor, Dragovic found that homes in the latter are a bit pricier per square foot. Semis, which are common in Trinity Bellwoods, generally have lower values when it comes to dollars per square foot, Dragovic notes — an average $840 per square foot in Trinity Bellwoods compared to $1,046 per square foot in the Bay Street area.

But he argues that launching a bidding war — pricing a property low to stimulate several increasingly higher offers from buyers — seems to work in an area like Trinity Bellwoods. There, homes sold over the listing price went for an average $871 per square foot, while those sold at or under the listing price sold for an average $811 per square foot.

The premium between the listed and sold price for homes that went over asking is 18 per cent in Trinity Bellwoods — $740 per square foot listed compared to $871 per square foot sold.

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By contrast, Dragovic notes, bidding wars don’t seem to be a good strategy in the Bay Street corridor. Homes there sold over listing price go for about $989 per square foot.

Meanwhile, homes sold at or under listing in the corridor sell at $1,053 per square foot.

The premium between the listed and selling price for units sold over asking in the corridor is nine per cent — $900 per square foot listed compared to the $989 per square foot sale price.

John Pasalis, president of Realosophy, a Toronto real estate brokerage that analyzes data to provide advice to residential real estate investors, buyers and sellers, says starting a bidding war by intentionally pricing one’s home low is akin to rolling the dice.

“When you list your home for sale in a particular area, part of how many offers you get is how nice your house is compared to the other houses that got listed that week, how many other houses got listed that week, what are they asking, and what nights are they taking their offers on,” Pasalis says.

Pasalis’ most recent listing — in Leslieville — went for what the vendor wanted: $1.2 million.

“We weren’t confident because the market is less predictable now. We listed for $1.2 million and sold for $1.2 million — it’s a time-of-year thing,” Pasalis explained.

Generally, a house or condo will go for what was established by recent sales, says Toronto Royal LePage realtor Desmond Brown.

“Every now and then, a new precedent will be set when someone pays a higher price,” Brown added.

“I always say there are two ways to a sale price; underprice and get a bidding war or price a bit over or around market value and negotiate a deal between one buyer and seller.”