In sizzling housing markets, how do you get the home you want?
With their first child on the way, Dan and Jasmine Young needed a more room than their two-bedroom west-end Toronto home could provide. “The baby was due in January and we were kind of thinking that we’d like to be in the house at least a few months before he came to get it ready,” says Dan. So they started their home search in the middle of the summer.
The process, he says, was demoralizing. “We probably put in six to eight bids,” says Dan. “We were going in with what we thought were decent offers and getting outbid by $125,000. And as much as you tell yourself not to get invested in a home, you start to imagine yourself in that place and that neighbourhood.”
In the Greater Toronto Area’s sizzling housing market (similar to other markets across the country), where bidding wars are almost de rigeur and house prices often far exceed the asking price, the Youngs’ experience is woefully commonplace. But they did find a house eventually, and you can too. Read on for advice on how to get the house you want without breaking the bank.
The Youngs’ real estate agent eventually suggested taking a slightly different approach. “You’re bidding against the same people every time,” she said. “Everybody is going after the same thing. So let’s expand beyond the houses that are just coming up on the market.” She suggested looking at estate sales, as well as homes that had been on the market a little longer — perhaps because they needed a little TLC.
The strategy worked. The Youngs made an offer on a detached house with parking and easy subway access that had been languishing on the market for about a month. The problem: it wasn’t updated, and the owners had already rejected several offers at or around the asking price. “They were holding out for a higher bid,” says Dan. In the meantime, buyers had moved on to newer properties.
“We offered below the asking price, based on comps in the area and the amount we figured we’d have to put in to the house,” says Dan. The former owners initially rejected the offer and “we all walked away.” But about a week later, the Youngs got a call saying if they came up a little on the price, the sellers would take it for $60,000 below asking. They jumped in with both feet and took possession last December.
More formally known as a pre-emptive offer, this involves submitting a bid on a home before the designated and planned offer day. “Buyers do it because they want that house and they want to have less competition,” says Real Estate Homeward agent Collette Skelly. “And sometimes it’s because they’re going away for a holiday to Florida and they want to put in an offer before they go.”
Even in today’s hot housing market, sellers sometimes accept, “mainly to avoid the inconvenience of having open houses,” says Skelly. “It means they don’t have to keep the house tidy and take the dogs to the kennel and the kids won’t have to go to grandma’s house.”
Conditional sales just don’t cut it when there are plenty of offers on the table. “We knew from selling our other house that when we looked through bids, even if they were the best offer, if they were conditional on inspections they were put to the side,” says Young.
Ditto for offers that are contingent on financing. “Homebuyers definitely need to get qualified and know how much they can pay up front,” says Skelly. If you are ‘pre-approved’ for a mortgage, the lender has made an actual commitment (subject to conditions such as a property valuation) to loan you money.
And if possible, adds Skelly, accept the seller’s preferred closing date and don’t quibble over buyers taking light fixtures or appliances when they go. “You don’t want to be arguing over things like that,” she says.
“Our budget changed from the beginning,” admits Young. “We had to take a second look at our finances and what we could afford, especially considering the equity in our other place. We pushed our budget as much as we could.” Many buyers are in the same boat, says Skelly, “with the way prices are rising every time you wait, it’s another $30,000 to $100,000 for a house.”
We were going in with what we thought were decent offers and getting outbid by $125,000 dan Young
before baby charlie arrived, dan, left, and Jasmine Young were lucky enough to purchase a home in toronto last december for $60,000 below the asking price.