Ten Tips for Buying in Canada's Seller Markets
In many ways, the COVID-19 pandemic has been very detrimental for Canada’s economy. However, one area that seems to be defying all odds is the housing market; Canada’s housing market is going from strength to strength. While this is sparking some concern among commentators because people are over-stretching themselves financially to grab their piece of the property landscape, there are a few ways that you can put yourself in the best position possible to take advantage of the current housing market.
1. Do your market research
Unlike other property booms we’ve seen in recent years, the current inflation on property markets can be seen in small towns as well as the traditional hubs such as Toronto and Vancouver. Therefore, if you find an area that seems to be relatively untouched by inflation so far, that could be a great place to look into. Chances are prices there will soon match up with other more expensive areas, so an investment in a property there could reap rewards in the years to come.
2. Take advantage of low interest rates
With Canada’s economy still weak, banks and other lenders are unwilling to raise interest rates for fear of putting buyers off. Bank of Canada Governor Tiff Macklem commented recently on the need to embrace the boost the property market is giving to the Canadian economy, saying “we need the support, we need the growth we can get”. This clearly indicates the reluctance of banks to act in a way that could further jeopardise Canada’s economy.
3. Be realistic with what you can get for your money
Sometimes we have to face the cold hard facts, and right now the truth is that you will, almost everywhere, get less for your money than you would have done at the beginning of last year. Having a more realistic mindset basically prevents you from getting too disappointed, and also makes sure you don’t waste your time looking at properties that are out of your price-range, leaving you more time to more thoroughly research properties that are within your budget.
4. Know the market inside out in your desired area
In a competitive housing market, it is not uncommon to be outbid on several properties before you manage to secure your own property. This means that knowing what a competitive bid looks like puts you in a great position for outbidding other people interested in the same property.
5. Use a great realtor
The knowledge that an experienced realtor can bring to the table is hard to put a price on. They can educate you about the housing market in your desired areas, giving you the confidence to bid competitively, raising your chances of having your bid accepted and securing the property you really want. As Bruce Cram, a sales representative with RE/MAX Hallmark Realty Ltd., Brokerage, commented, “listing price is just an offering to market”, meaning that the price a property eventually goes for is likely to be much higher. Therefore, to have a good chance of pitching your bid aggressively, you need to know how much that property is actually likely to be sold for.
6. Consider a bully offer
A bully offer, or a pre-emptive offer, can often work well. It constitutes an offer that is put forward by a buyer and their agent to convince a seller to disregard interest from other parties by offering above the listing price, often as a cash buyer, and without any conditions. This is usually an attractive proposition for a seller, so for buyers who can put together such an offer are often successful in their bid.
7. Make an offer without conditions
Similar to a bully offer, but less aggressive, is an offer without conditions. If you are battling it out with a number of other prospective buyers, putting in an offer without conditions can be attractive to the seller and sway the odds in your favour.
8. Stay hopeful about the future housing market
While it is very much a seller’s market in Canada at the moment, that won’t be the case forever. Lisa Patel, president of TRREB (Toronto Regional Real Estate Board), recently observed that, “once we shift out of this lockdown, those that are comfortable will have the opportunity to put their homes on the market. That might open up supply a little bit more.”
9. Keep trying
In a seller’s market it can be easy to quickly get disheartened as you have bid after bid rejected. It’s important to stay positive and keep trying. Perseverance will eventually pay off!
10. Use an online mortgage calculator
The best way to ensure that you don’t overstretch yourself financially when you are looking into buying a home is to calculate exactly how much you will have to pay per month to keep your home. There are lots of tools out there to make this easier for you, such as the Monthly Payment Calculator at MortgageCalculators.info. This easy-to-use calculator takes all the stress out of figuring out how much you would pay for the property you are considering purchasing. Having accurate calculations at your fingertips is a superpower in today’s world, and arms you with all the information you need to make the best decision for you specifically.