How to buy a home in a scarce marketplace?

The Toronto real estate market right has become incredibly competitive due to the lack of condo and house listings. Because the majority of condos don’t have offer dates, it means getting clients into great condos within the first couple of days of the suite hitting the market is critical. A few weeks ago I made an offer on behalf of a client for a condo townhouse in the Yonge & Eglinton area. The townhouse came on the market on Friday. I showed it to my client Saturday. Sunday we put in our offer. By Sunday night, there were now 4 offers on this unit and unfortunately we lost out.

In the housing market, even though there are offer dates, I encourage clients to skip the queue and make a bully or pre-emptive offer long before offer night. I recently helped my clients purchase a great home on in the Yonge & Lawrence area using this tactic. I spend a lot of time looking for new listings in the areas my clients are searching, and on Monday around 3pm, I noticed what I felt could be the perfect home for them. The husband was available to see the home at 4pm. After our showing, he decided he loved it and his wife needed to see it, so at 5:30pm his wife came in to see the home and she loved it too. While at the house, I noticed that only the business cards of my colleague & me were present, so it would be a great opportunity to present a bully offer as we were the only ones who had seen the house. I mentioned to my clients that people on property match (daily listings clients receive from their agents) or using would see this house the next day on Tuesday so they wouldn’t have a chance to react. In addition, it was the first day back to school from March Break so people wouldn’t be as focused on their house hunting right now. We put in our offer that night and Tuesday afternoon, my clients had an accepted offer and a new home. They were thrilled. Their home search had finally come to an end in the perfect neighbourhood.

I worked with another couple looking for a large downtown condo. The perfect 1300+ sq ft condo with 2 +1 beds and 2.5 bathrooms overlooking Roy Thompson Hall came on the market. We went to see the condo on its second day on the market and made an offer the next day. My clients finally had the place of their dreams and the listing agent informed me that she was receiving many calls from other agents whose clients were upset she sold it so quickly to my clients.

As I always say, the early bird gets the worm and that seems to really be playing out in the 2016 real estate market, where buyers and their agents need to be really aggressive with what they want in order to buy the place of their dreams. Toronto has become like New York: if you want it, someone else does too and your only advantage is to beat them to it.
Condo loft

Would You Prefer An Auction Over A Bidding War?

Real estate lawThere has been much talk lately of changing the bidding war scenario of blind offers on houses to an auction format where everyone can see what the offers are. I disagree with the using the auction mentality to purchase a house. I have noticed a few houses in Toronto have gone the auction route. Some have met with success and others have not. The reason why I am against open bidding for a house is simple. I feel that with an auction for a house in Toronto, people would get carried away and allow their ego to take over and pay more for the house than they should. When people see someone raising a paddle to pay a certain amount for a house, I believe their ego will get the better of them and they will start to say things in their heads like, “well if that person can pay that much for the house, well so can I”. Time for rationale thought will disappear. When a buyer is in a blind bidding war scenario, they may not know the price but they aren’t sitting in the middle of the action and they don’t have to make a 30 second decision to spend more money.

They can sit in a separate room with a spouse/friend/parent and make a rationale decision. They can take the time to think about how much they can truly afford and if they really want to purchase this house.

In an auction scenario, the ego takes over. The next day, the lucky bidder may have buyer’s remorse. As much as buyers are upset with the blind bidding war process, the open bidding environment of an auction, will create a volatile situation where buyers pay more for property then they really should. Yes buyers do need protection from themselves. Maybe they will come to realize that bidding wars aren’t so bad.

Caution to Buyers on Bidding Wars

Toronto’s housing market is a tough place for buyers.  This is mainly because there aren’t enough houses currently on the market to satisfy their demands.  It’s leading to many bidding wars where anywhere between 9-34 people are  bidding on the same house.  And it’s driving the price up of some homes to well over $100,000 over the asking price.  This is occurring in Toronto’s most affordable  neighbourhoods: Leslieville & Bloor/Dundas West.  Buyers get sick of losing out on so many houses that they decide to offer a very high price for a house to make sure they get it.  However there are ramifications for over paying for a house.  Will the bank’s appraiser agree that this is the new value of the house?  If the buyers are using CMHC, will their appraiser agree to finance the house if they don’t feel it’s worth what they paid?  In addition, buyers tend to waive their finance conditions to be competitive during a bidding war which presents a further problem, if the appraiser does not agree with this new value.  It’s something many buyers need to think of before they over pay for a potential home.  They should also keep in mind that the markets in May through the end of August can offer them a much calmer pace for purchasing houses, without as many bidding wars.