This blog was originally written during the hot market of 2016 when Saira attempted to purchase a home for herself and competed against eight other buyers who wanted the same home. Here are her tips for being prepared and how to keep your cool in a hot market!
1. Know what you want!
One of the tools our team uses with clients is a needs, wants, wishes, and deal breaker list. When you find a great property, always cross reference the list. Don’t get swept away by the pressure of multiple offers, make sure the property fits your requirements.
2. Move quickly
In a brisk market, you need to act quickly. We recommend seeing listings in the first day or two once they hit the market. Most sellers are setting a day and time when offers will be presented. The quicker you can get in to see the home, the more flexibility you’ll have to satisfy conditions ahead of time or decide if you want to move forward with an offer. There is also a risk of a bully offer coming in (where someone will try an offer before the set offer presentation day and time). If you’ve already seen the home, you may have an opportunity to compete against the bully offer if the seller decides to entertain it.
3. Consider unconditional
We only recommend not including conditions like financing or inspection if you have satisfied these conditions ahead of time. This could mean submitting a hypothetical deal through your mortgage professional to get a financing approval. You may also pay for inspections before you know you have the property. This can be risky, but it can give you a head start on other buyers. A prudent REALTOR® and mortgage broker will advise you of all the risks you’re taking with each decision you make.
4. Consider the long term
We recommend our clients look at real estate as a long term investment. Are you going to be able to grow in this home? Are there options to finish a basement if you need more space? Can you suite the downstairs and keep it as an investment? Think of your long range plans and then consider if it will make a big difference to your life if you have to up the price to get your dream home.
5. Know Your Numbers
You should know exactly how much cash you need for a down payment, property transfer tax and closing costs at various price points – do you have enough? You should also calculate your ongoing monthly costs: mortgage, property taxes, estimated heating/utilities, strata fees, insurance, etc! We love the Canadian Mortgage App for all these calculations. You’re able to plug numbers in, including rent if there is a suite, get a really good sense of what your ongoing monthly costs are, and the cash you need to proceed with the purchase.
When you’re competing, it’s best to focus on your monthly cost (which you have to live with during the term of the mortgage) and less on purchase price. Instead of asking, “Should I spend another $5,000?” ask yourself “Can I afford another $20/month?” This will help alleviate some of your stress when deciding on a price to offer.
6. Keep your cool
Understand that an offer is only a means to tie up the property until you satisfy your conditions. With multiple offers, you may only get one shot to put your best offer forward. If after you submit your offer the seller wants to further negotiate with you, I would say to trust your gut. Ask yourself all these questions: Am I going to be excited to get the home for this price? Or, will I resent the home because I felt like I over paid? Is this a long term investment? Can I afford the monthly costs? Will I have enough cash on closing? Is this what I want? If I lose this home, is it the end of the world? (I assure you it’s not).
Competing to purchase a home is a lot like falling in and out of love. If you don’t get your dream home this round, don’t worry! When you find “the one” you’ll know why all the other ones didn’t work out. =)
We have helped hundreds of clients buy and sell in very competitive markets. If you would like to meet with one of our team members for a buyer orientation, please contact us to book an appointment. We will discuss what to expect when you buy, strategies for being successful, and costs to be aware of no matter what you are looking for.