In siz­zling hous­ing mar­kets, how do you get the home you want?

Metro Canada (Calgary) - - SPECIAL REPORT: MORTGAGES - Camilla cor­nell

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

Jon nicholls

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.

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