Home Buying in Sellers and Buyers Market
Home Buying in Sellers and Buyers Market – Read Before You Buy!
Home Buying in Seller’s and Buyer’s Market requires an entirely different and distinct game plan. Real Estate is constantly changing and evolving, particularly in popular Canadian cities like Toronto, Mississauga and the rest of the GTA. A steadily increasing influx of newcomers from the U.S. and the rest of the world, non-availability of new land for construction, government measures to control the market, including new laws, mortgage rules and interest rates will always put a pressure on real estate. We will constantly have to deal with fluctuating market conditions.
As a Buyer Realtor with Team Amit Kalia, here is my home buying experience from early 2017 up until April, which has been by far the best market condition for Sellers in the GTA, and by far the worst for Buyers.
My Experience Working with Buyers in a Sellers Market
Early 2017 proved to be one of the most stressful and frustrating periods for home buyers looking for their first or second home in Mississauga. Homes were selling for staggeringly high prices. Buyers were competing with dozens of other prospective buyers, each one with a better offer than the first. People were not only willing to pay much more, they were also willing to forego all conditions hoping to make their offer more attractive to the Sellers. Risky? For sure! Right thing to do? Depends on whether or not the Realtor and the Buyers did their due diligence before taking such a step.
How did I go about working with my clients in this market condition? In my opinion, team work between the Realtor and the Buyer is key in such a seller’s market condition. As they say, two heads are better than one. The Realtor and Buyer need to have a strategy and a mutual understanding on how they will approach the whole home buying process. By sticking to your game plan, you can avoid becoming disheartened or stepping out of your buying limit when competing buyers place higher bids. Remember, it is a game of mind over emotions.
As a Buyer, you need to have a list of contacts ready in consultation with your Realtor. Your Realtor should be able to recommend lawyers, inspectors, mortgage agents and brokers to you. Ultimately, it is up to you to choose the ones you feel most comfortable with.
As a Realtor, here’s what I do to protect the best interests of my Buyer clients when submitting a non-conditional offer in a multiple bid situation.
- Signing a BRA (Buyer Representation Agreement)
- Having my clients get a pre-approval on their mortgage before starting the home search
- Having reputed lawyers review status certificates for condo apartments and townhouses before placing an offer
- Having a home inspection done before the offer presentation
- Discussing true comparable properties with the buyers so that they can make a more realistic and informed decision on their offer price, while also keeping the likely appraised value in mind
- Monitoring the situation by calling both the Brokerage and the Listing agent to see how many offers are registered in order to revise your offer if needed.
Being quick in a Seller’s market goes a long way in improving your chances of securing a home. If you are looking to both Sell and Buy in a Seller’s market, you might need to Buy first. This is a market based strategy that can allow you to secure a new home before selling your existing one. Remember, there is always a shortage of homes in a Seller’s market. Hence you need to ensure you have secured a home first. Assuming the Seller’s market condition prevails, you will be able to sell your existing home pretty fast too.
My Experience Working with Buyers in a Buyers Market
Home buying in a Buyer’s market can be a breeze. However, you can never afford to throw caution to the wind!
A Buyer’s market is characterized by an abundance of available home inventory at a given time. The Fair Housing Plan announcement by the Ontario Government in late April this year quickly transformed the Seller’s market into a Buyer’s market. Many Sellers who were caught in this transition are in the market for a third month still trying to sell their home. It is almost as if the Buyers have disappeared. The point is that the real estate market is constantly evolving and changing, one cannot take it for granted for any period of time.
Again, being adaptable is the name of the game. If you are looking to both Buy and Sell in a Buyer’s market, it might make sense to sell your home first. You should offload your existing property first, and then buy, as there is so much inventory available in the market.
Here’s how I typically work with Buyers in a Buyer’s market:
- Signing a BRA (Buyer Representation Agreement)
- Providing my clients with a recommended list of mortgage agents/brokers, home inspectors, lawyers, for them to choose from
- Having my clients get pre-approved on their mortgage before starting home search (regardless of market conditions, this is always a good place to start!)
- Putting in appropriate conditions such as finance, home inspection or status certificate review for added due diligence and protection for my clients
- Having reputed lawyers review status certificates for condo apartments and townhouses or other legal documents
- Discussing recent comparable properties with buyers to help clients save money by reasonably low balling an offer
In a Buyer’s market, since there is a lot of inventory, one can get away with conditional offers. However, at the end of the day, it is the Sellers prerogative to accept the conditions and the price offer. We need to be realistic and fair in our approach.
Why Work with our Team?
You need to work with a local, professional and experienced real estate team who will not allow you to be overly emotional or totally aggressive regarding your first or second home purchase. Team Amit Kalia has been serving real estate in the GTA since 2003. We have a prominent Downtown Mississauga office location, and one of the best online presence!
As a Buyer, please remember that Buyers typically DO NOT pay any commission to Realtors when buying a home. It is always better to work with a Buyer Realtor to ensure your best interests. You don’t usually gain from buying directly from the Listing Broker.
When buying a home, it is important for you to know why it is a good home for you. However, what is even more important is knowing why a particular home may NOT be right for you. A Listing Broker may not say that to you. Whereas, if you are working with your own Buyer Broker, he or she will tell you exactly why you should or should not be buying a particular home, while also negotiating a better price on your behalf!
Keep on the lookout for my next post regarding real life examples of working with my clients in these two extreme market conditions.