Buying a home can be a stressful experience, especially if you’re buying in a competitive market. Here are our tips for getting through it.
We once considered Toronto and Vancouver to have Canada’s hottest real estate market, but now, Ottawa’s record-breaking housing market is joining the pack.
Homes in Ottawa are selling quickly and for significantly higher prices than ever before.
Welcome to a seller’s paradise.
While a seller’s market is great for sellers, it can be a stress-inducing-hair-pulling nightmare for buyers. Plus, we haven’t even discussed the most stressful part of a seller’s market: bidding wars.
Bidding wars jack up the price of a home (again, great for the sellers) and can be demoralizing for buyers who are sometimes rushed into making huge financial decisions and could still lose out on the home of their dreams.
While we can’t control the market, there are steps buyers can take to reduce their stress and increase their odds of getting the house they want without breaking their budget.
Check out our tips, and soon, you’ll be a master at buying a home in Ottawa’s most competitive real estate market.
Tip #1: Negotiate in Line with Market Conditions
Playing hardball in a hot market is a risky business. If you find a property you love, weigh the risk of potentially losing the deal against the benefit of saving a few thousand dollars.
Consider this scenario:
After months of looking, Sarah finally found a house within her price range in her desired neighbourhood. The home had been listed for two weeks despite the hot market. Sarah’s agent, a friend of the family who was starting out in real estate, assumed the sellers would be motivated and used negotiating tactics that were more suited to a buyer’s market.
They made a low offer, and when the seller countered, they countered again.
Meanwhile, the seller’s agent was busy reaching out to other interested parties to let them know the house was under offer. A second offer came in, and a bidding war ensued. The house went to the second buyer for above the asking price.
An experienced real estate agent with their finger on the market’s pulse can save you from making critical negotiation errors.
Tip #2: Sweeten the Pot When Buying A Home
Properties don’t always sell to the highest bidder. Understanding what matters to the seller can enhance the appeal of your offer.
Consider this scenario:
A seller is presented with three offers on their home: $675,000, $665,000 and $660,000. They go with the lowest bid.
The highest offer was conditional on the buyers selling their home. Conditional offers are far less likely to come out on top in a bidding war.
Unconditional offers are the holy grail. Once signed, the seller knows it’s a done deal.
The other two offers differed only on price. The higher offer came from a developer who planned to tear down the existing house and rebuild. The lower offer was from a young family who’d included a cover letter with their offer telling the sellers what they loved about their home.
Even though the higher offer made more financial sense, the sellers had lived in the home for 35 years and selling it was an emotional decision. Choosing a buyer who valued their home gave them peace of mind and was worth the price difference.
In a bidding war situation, remove as many conditions as possible before making your offer.
Find out the seller’s ideal closing date and try to match it. Offer a generous deposit to demonstrate your commitment.
Making a personal connection with the seller can help, but it can also backfire if it feels manipulative. Be genuine about what you love about their home, property or neighbourhood.
Tip #3: Be Prepared When Buying A Home
In a seller’s market, houses tend to sell within days, not weeks. Know what you want and be prepared to act quickly when you find it.
Get pre-approved for a mortgage before you start house hunting, so you have everything in place to make an attractive offer when the time comes. Learn more about mortgages here.
Consider booking an inspection before the offer date or booking a second viewing with someone knowledgeable enough to recognize any red flags. Learn more about home inspections here.
If your real estate agent knows your need-to-haves and nice-to-haves ahead of time, you’ll hear of properties that match your requirements as soon as they hit the market.
Tip #4: Know the Market & Stick to Your Budget
As a buyer, it can be discouraging to repeatedly go through the cycle of getting excited about a property only to lose out in a bidding war, but panic buying or getting caught up in auction fever can lead to buyer’s remorse down the line.
Be clear on your limits and have a real estate agent who knows the comparative value of properties to keep you on track.
Consider this scenario:
Two condo owners with identical units are both on the market at the same time. One lists at $575,000, hoping to attract a lot of interest and start a bidding war. The other lists at $625,000, knowing it’s a hot market so they can list high. Both are great strategies but paying $25,000 over asking for the first one is different than paying $25,000 over asking for the second one.
In a seller’s market, you may want to look at houses below your budget rather than at the top end of your range to avoid paying more than you can afford.
You’ve Got This!
The keys to successfully buying a home in a tight market are to match negotiating tactics to the market, be prepared to make as clean and attractive an offer as possible when you find the right home and understand the comparative value of properties so you can assess how much you’re willing to pay before you get involved in a bidding war.
Buy and Sell with Confidence. Choose The MacDonald Property Group.
At MacDonald Property Group, we have a dedicated full-service team under one roof ready to provide the expertise you can trust. With over twenty-five years of experience in real estate, we have sold and bought over a thousand homes. We’re proud to say that we’ve helped thousands of clients in Barrhaven and across the Ottawa area close a deal with confidence and satisfaction.