Recent data from the Toronto Real Estate Board shows that the number of active MLS listings is significantly lower (by around 47%) than last year. As a result of low borrowing rates and a ‘wait and see’ stance on the part of many Canadian sellers, the market in Canada looks significantly different from that in many U.S. locations. Experts have been baffled by reports of bidding wars in several excellent Toronto neighborhoods and even in some suburban areas. Many buyers and their agents have expressed displeasure after losing out in a seemingly senseless bidding war. Finding the ideal home and then losing it to a higher bidder is one of the most unpleasant experiences a buyer and their agent can go through.
A well-thought-out plan is essential in a competitive market like this one, where a swift response is necessary at every stage of the buying cycle. The search for a suitable dwelling may take longer than expected. It may not be possible to “sleep on it,” speak with family and friends, or tour the home many times before making an offer once you’ve located the one you want.
A skilled Buyer’s Agent with extensive knowledge in this type of market is invaluable.
In this market with few options, consider these suggestions:
First, choose a professional Realtor that specializes in your area and works there full-time.
An experienced, professional, full-time Realtor is your best bet in a competitive housing market where the best properties sell quickly. A good realtor will utilize all their talent and experience to obtain the house that meets your needs. Going it alone will put you at a disadvantage despite the wealth of information at your fingertips, thanks to the internet.
2. Engage your Realtor in a Buyer Agency Agreement.
Buyers informed about the advantages of signing a Buyer Agreement with their agent will be happy to do so. The fundamental principle here is that the agent represents the Seller unless the Buyer and the Agent sign a Buyer Agency Agreement. Remember that the seller pays the commission and that the agent is obligated to look out for the buyer’s interests only if they sign a buyer agency agreement. Some purchasers may be hesitant to “bind” themselves to a Buyer Agent, but it is essential to remember that the deal “binds” the Buyer Agent to the purchaser. Once the agent begins representing you as the buyer, they are legally obligated to act in your best fiduciary interest and provide you with various services.
Third, have your realtor set up a Buyer Contact system to have the Multiple Listing Service (MLS) e-mails you whenever a property matching your criteria becomes available in your desired location and price range.
Most major city Multiple Listing Services have a notification system so potential buyers may enter their preferred location, price range, and property type to have all new listings in that region emailed to them as soon as they hit the market. The service is free and straightforward to set up for the Realtor, and it functions similarly to receiving an RSS feed from the Real Estate Board. These daily updates are generated automatically and sent to your mailbox. If you see a home that intrigues you, you can easily schedule a viewing by contacting your agent.
4.) Have your Lender give you pre-approval and read and fully comprehend your loan commitment.
A pre-approval from your bank, mortgage broker, or lending institution is one of the most crucial steps you can take, and it’s also one of the easiest. Almost all lenders provide this service at no cost, and the duration of the service is generally between 60 and 120 days. Once pre-approved, you’ll know exactly how much you can afford to spend on a home. Your real estate agent should be able to put you in touch with first-time buyer loan specialists. Pre-approval can help you iron out any kinks in the road caused by credit problems in the past. A simple explanation is often needed to resolve a minor credit issue. Although verbal credit approvals are acceptable, written endorsements are preferred.
5.) Have your house-viewing schedule ready as soon as possible.
Again, when supply is limited in a seller’s market, it is crucial to move swiftly once new listings become available. The house may be sold when the weekend rolls around, or it’s handy for you to visit. Make sure you schedule in time to see new releases as they become available.
If you expect to receive numerous proposals, step six is to have a plan.
Talk to your broker about your strategy for handling many offers. Competing successfully often requires tactics that only a seasoned agent would know. Set an upper limit on your spending. Your agent will be aware of the number of rival offers, but they will be unaware of the specifics of the other suggestions regarding price, terms, and conditions. How far do you intend to go? That’s something you should talk about in advance. Your offer can stand out in many ways beyond the offer price; one of the most important is the size of your good faith deposit. In the case of two otherwise identical offers, the one with the greater assurance is the one the seller is most likely to accept. Ensure your agent communicates with the listing agent to establish a mutually agreeable closing date. Don’t complicate things more than they need to. Again, a seasoned agent will contact the seller’s agent to confirm which terms and conditions are acceptable. To incorporate; to incorporate.
7. Realize the potential consequences of your offer.
Almost all offers include a ‘condition’ that states the buyer can only proceed with the purchase if specific requirements are met. The sale of the buyer’s property, the acceptance of the buyer’s financing, the results of the house inspection, and (in the case of a condominium) the delivery of a condominium Status Certificate are all examples of common contingencies. (if the buyer also has a house to sell). A buyer is disadvantaged due to the factors above when there are several offers. If numerous bidders have submitted essentially identical bids, the seller will likely choose the bid with the fewest stipulations. (the fewest risks for the seller). In the Toronto area,
many sellers will cover the cost of a professional home inspection and make the report available to the buyer before the sale is finalized, thus avoiding needing a home inspection contingency. Again, a knowledgeable real estate agent can offer guidance on whether or not specific terms should be included in a competing offer. A buyer takes the most excellent chance by making a “firm” offer with no stipulations, especially about financing from a bank. You need to know that the bank will provide you with a loan unless you plan on paying cash for the house. Remember that if the seller accepts your offer, you will have a legally binding Contract to perform. Buyer approval is not required from banks, but transaction approval is required. A bank’s official appraiser will check the residence to make sure the loan amount is reasonable about its market value. The bank may not give you the total loan amount if your winning bid exceeds the property’s appraised worth (due to a bidding war). For this reason, you must have this conversation with your agent and your lender.
8.) Before making an offer, have your agent conduct a complete Competitive Market Analysis.
The basics of the real estate market are covered here. If you want to know how much the house you’re interested in is likely to sell for, you should have your realtor show you the prices of recently sold comparable homes in the area. Property prices will vary depending on several factors, including the house’s condition, position on the street, and the time of year.
Avoid unpleasant surprises by learning upfront about the total closing fees.
Closing charges, such as the Ontario Land Transfer Tax and the fees for your lawyer’s services, are paid once you have successfully acquired the home of your dreams. On the closing date, these sums are due. (the day that you get the keys and take possession). Your real estate agent should be able to give you a reasonable estimate of these final fees.
All of these are examples of the kinds of advice that a professional Realtor can give you when you’re trying to purchase in a hot real estate market. If you don’t use them wisely, you might have to watch as someone else moves into the house of your dreams.
Since 1993, Randy Selzer has been assisting clients in the Greater Toronto Area with purchasing and selling luxury real estate. Web 2.0 and social media networking are also areas of study and interest for Randy. Visit http://randyselzer.wordpress.com/ for free E-books, other resources, and expert advice on real estate.
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