As you may know, it’s been around 2 years now that we have a seller’s market with the ‘’bidding’’ phenomenon (to the seller’s advantage, so more demand than offer), and this type of market, which comes back cyclically (we talk about 6-8 years but these are only numbers, nobody can know for sure what’s going to happen), implies a few specificities to which you have to be prepared for !
Here are some useful tips :
- Be reactive and flexible ! Once a property goes out on the market, some showings or open-houses are quickly planned, and in general it’s the seller and his broker who decide the days and time for the showings. Given the high volume of buyers on the market, the sellers take the offers right after the showings or open-houses, so make sure that you’re not too late. Which means obviously to be INVOLVED in your own real estate process, and if it’s a priority for you, especially if it is a first buy, then it’s really important to make some time and to be as available as possible to go visit and fill in the promise to purchase with your real estate broker.
- However, DON’T GET RUSHED ! The market is what it is, but this doesn’t mean to rush and buy the first property you see ! Buying for buying is never a good idea (unless you’re in a specific scenario where you don’t have any choice but to find yourself a place to live quickly), you will regret it, and it’s also potentially dangerous for you. So take the time to see several properties, and if you choose one, if the property will indeed fit your needs. Otherwise, don’t get discouraged and go on to the next one !
- Take the time to digest the steps : you will probably have to do several offers before seeing one accepted, so it takes time and tenacity. Stay positive, and take this opportunity and this ‘’waiting-time’’ to review the clauses of your offer in detail with your broker, ask him-her some questions, try to gather more information, accumulate some statistics on properties (prices sold VS asked, etc..), in short, use your time so that it can be profitable for your real estate process !
- NEVER go beyond a price to which you’re not comfortable with ! If your offer is accepted and you’ve put 80k more than the asking price but you realize that your bank account can’t follow, especially when you contracted a debt for the next 25 years, it’s not really the point of a real estate investment..
- Given the actual market, some buyers are tempted to by-pass some of the conditions of the promise to purchase : WARNING, for the less conservative among you, to take with caution of course ! Make sure to be able to have the maximum documents on the property you can, in order to have the more information you can and to take the best decision possible. For a first buy, it’s NEVER a good idea to by-pass the building inspection, for example.
- Forget the ‘’Deal’’ and focus on stable goods : a well-located property, potentially with a good rental revenue (if you wish to give yourself this option), a quality construction, a sane and well-managed co-ownership, in short, a building which is not going to lose value and on which you can minimize the risk to have problems, which ultimately will mean expenses on the long haul. In a market like this one, the ‘’good deal’’ does not exist, if you look for it you will probably waste your time, which is quite precious : for instance, the ‘’sales without legal warranty’’ (including the repossessions, etc..) are almost at the same price and the ‘’problems property’’ as well (foundation problems, etc..), so don’t think about going for this type of property because you will risk to lose a lot, and especially put your mental health in danger. In a market which is not to your advantage, try to put the focus to minimize your risks instead of wanting to maximize your profits.
- Trust your guts (and your broker’s !) The visual and aesthetic side of an apartment is, for sure, important, but don’t forget that once you have made a choice, you will be linked by contract with a seller, so you will have to compose with his or her way to work (and his or her broker’s). If, for a reason, you do not have a good feeling with the seller and his-her broker, if you feel that you might be manipulated, or that you do not get the transparency you are in right to expect, then it may not be for nothing, and maybe something is wrong. There are definitely some parameters more or less under our control, and sometimes we do not have a choice, but make sure to analyze ALSO the ‘’non-visible’’ elements before putting an offer on the table. Your broker will help you with his-her impressions, so take the time to share with him-her and to compare your feelings.
- Be sure to be (well-)represented : we can never say this too much ! A good real estate transaction is all about having good business partnerships. A real estate broker, a mortgage broker, a building inspector, a notary, and other professionals if it’s the case. You will work several weeks, even months, with all these people, so make sure the more possible to be surrounded by a reliable and trustworthy team, with whom you will also have fun working with. And don’t forget that they are here to protect you legally. Do not hesitate to ask for references to your real estate broker, who probably has some ‘’prime’’ contacts, and also ask your close circle !
Don’t hesitate to write to me, share your experience and get more advice !
This article is written by Hélène Chebroux
Published on Via Capitale du Mont-Royal’s blog on january 30th, 2020