We are first time buyers frustrated by the hot real estate market we are searching in. What advice or tips do you have for us?
We’ve been seeing hot real estate markets in many places across Ontario — even where the market is more balanced and not necessarily favouring the seller or the buyer.
When housing demand outpaces the available supply, buyers often end up in competition with one another. The process can become an emotional rollercoaster. If you’re planning to buy in competitive conditions, it’s doubly important to understand your wants and needs, and get informed about the process so that you can keep a cool head in a hot market.
A few things to keep mind:
- Read and understand everything before you sign anything. Real estate contracts are typically written to be legally binding. No matter how much pressure you’re under, make sure you know what you’re signing.
- Make sure you and your sales rep are on the same page. Interview at least a few and choose one you connect with. Both you and the rep should be clear in your understanding of the services to be provided and approach to the buying process — including your ability to manage a fast-paced offer process.
- Leave your emotions at the door. Know your wants and needs, and the maximum you are prepared to pay, before you start viewing properties.
- Know your tolerance for risk. For instance, if you’re thinking about submitting an offer without conditions, be sure you’re comfortable paying for unexpected repairs that may have been identified in a conditional home inspection.
When you’re ready to make an offer, there’s a good chance you’ll find yourself in a bidding war. A seller may list their property with a delayed offer presentation date or at a low price to encourage multiple offers.
Know that details of any offers submitted by other buyers must remain confidential. If you submit a written offer, however, the seller’s representative must disclose how many competing offers have been received.
You must also be told in writing if the seller’s brokerage is representing one or more of the buyers.
And remember: no matter how high your offer, a seller can choose any offer or reject all of them — using any criteria they choose. They don’t have to accept the highest offer and sometimes prefer other terms like a closing date or the size of deposit.
I recommend getting advice from your salesperson and a mortgage professional as you determine your maximum offer. Sometimes the winning bid in competing offers may go well beyond the ask price, so it’s important to be well-versed about the market values in the area — something your salesperson can help you with.
Also keep in mind that if a home appraiser finds that the value of the property is less than the amount you have agreed to pay, you will have to make up the difference between the appraised (approved mortgage) value and what you agreed to pay in the offer.