Spring 2014 has been a very, VERY competitive seller's market. It's been said a thousand times before but having seen so many clients go through the pain of buying in this market, the competitiveness really can't be stated enough. I have paperwork ready for any home that my clients might find remotely interesting so that they can submit an offer within minutes of viewing it. It sounds crazy but letting a couple hours go by can mean the difference of a single offer versus competing with other buyers. Buyers often spend more time cooking dinner than they do deciding on where they will live. It doesn't make sense but it is the reality buyers face today. To help buyers sort out the challenges of home buying, I've decided to write a post on my top tips for buying in Oakville's crazy housing market:
1. Be Organized
- Buyers often don't know where to start when thinking about buying a home, especially their first. The very best first step is to look at your financials and speak with a mortgage broker. It usually only takes a couple of days to get pre-approval and unless you are buying with cash, having a pre-approval in place is the only way you can look with confidence. I've heard all kinds of stories where buyers unexpectedly had issues arranging financing at the last minute. Getting your finances in place helps you be realistic with what you can spend and it is much more productive than spending oodles of time on Realtor.ca and open houses.
2. Hire the Right Agent
- This step goes hand in hand with getting organized. There are predominantly listing agents (the realtors whose signs you see everywhere), buyers agents (like Moi!), high volume agents and agent teams. I'm not going to lie -- there are many agents that give our profession a bad name so there are some that I think are just plain bad to deal with. The good news is there are also a lot that are hugely helpful. Reading testimonials, speaking with past clients, getting referrals from friends and interviewing agents about their knowledge of the market are all really good steps to weeding out the good from the not so good. Agents do a lot more than just unlock doors if you utilize them properly. Sellers pay the buyer agent in the vast majority of Oakville transactions, so do you should utilize us for the knowledge that we can provide and do so early on in your home buying search.
3. Look When You Are NOT Under Pressure
- This is a really, REALLY important step. If you are thinking of buying a home 3, 6 or even 9 months from now, it is really beneficial to take a couple Saturdays to go out with your agent and look at a variety of homes. I like to take my clients to see 8 or 9 homes at a time at different points within their budget and within different neighbourhoods. It is a really good way to get a feel for what you like both in terms of size, layout, finishes and neighbourhood. If you already know what you want than one afternoon out will reaffirm what you already know. It will also help you better understand market values. If you aren't sure what you like, seeing a variety of homes helps you narrow down your choices significantly. It's hard to tell from realtor.ca or even from driving neighbourhoods and attending the odd open house, the good from the bad and the best value for money so do yourself a favour and ask your realtor to take you out sooner rather than later. When the time comes to buy, you will already understand the market and be ready to jump on the right home without hesitation.
4. Track List vs Sale Prices of Homes You Have Seen
- When you follow step 3 above, you can start to track list versus sale prices. Your realtor should already know values but this helps you get a feel for them first hand. Pictures can be so deceiving and it's hard to even remember a home if you've only seen it online. When you have seen it in person, you get an idea of what you think the home is worth so it puts values into context when you actually see the sale price. It also helps you establish demand by seeing how quickly the home sells. I find that clients can sometimes be hesitant to take advice blindly. The best way I know to establish trust with my clients is to show them some homes first, give them my opinion on their desirability and their value then let my clients see first hand how quickly and for how much it sells. You can now better gauge my expertise on the market and have more confidence in my valuation of the home you eventually buy. This gives you confidence that you aren't overpaying for a home or buying something that doesn't have much desirability.
5. Understand The Type of Home that Provides Good Resale Potential
- I love statistics and think they have an important role to play when studying real estate values. That said, not all homes are created equally. What a typical buyer is looking for in an $800,000 home is different than that over $2,000,000. What is important to know is what your competition wants at each price point. Even though you may not care for a 5th bedroom, if all the homes at your price point have one, you need to know so that you buy a home that will maintain good resale value. The same goes for levels of finishes, location and style and colour trends. If you plan on living in your home for the next 20 years the resale potential may be secondary to you but it is still important to get a sense for what sells well in case you unexpectedly need to sell.
6. Be Realistic
If you have followed all the steps until know, you should have a pretty good idea about the market and what your money can buy. Now is the time to get real about what you will buy. Your agent should be able to tell you how long it should take for a home that meets your criteria to hit the market. You need to ask yourself if you are prepared to wait that long before you buy. You also need to understand what is required of you once you own a home. A lot of people like the idea of customizing their home but you need to have the funds and time or expertise to get it done. Is this realistic for you? Conversely, you may want all the bells and whistles but if your budget won't allow it you are better off coming to terms with the fact that you may need to live in a less than ideal space for a few years and be prepared to take on renovation work or else you need to scale back to a townhome, newer home, smaller home, less desirable neighbourhood, etc to find a home in your desired move-in condition. If the steps above are done correctly than I typically find that my clients don't suffer from unrealistic expectations and the buying the right home becomes a fairly straight forward process. I only mention this step because if the market continues to increase as it has been, having unrealistic expectations can delay you for months, ultimately pricing you out of the market.
7. Focus on Getting the Right House, not the Right "Deal"
- I would much rather my clients get an okay price on a great home than a fantastic price on an okay home. The reason is simple. Great homes have much better resale values and are better investments. Psychologically, people love to feel like they get a "deal" when they buy a house. Negotiating 5 or 10% off the list price feels like you "won". The reality is that list prices don't mean anything. Paying 10% above list price on one home may be a much better price than 20% below list price on another. If you have the right education, you should have a good feel for the market by now. This is where your realtor can help give you advice on how much a home is worth, how desirable it will be to other buyers and how well it stands to fare in the future. Focus on getting a fair price on the right home, not a steal on the wrong one.
8. Understand the Difference Between Comparative Value and Market Value
- When you have found the right home, I put together extensive information to show you how much the home is worth vis a vis other homes that have sold in the past. If a lot of time has past between the sales of these homes, I also account for an adjusted value to take into account the increase in the value of the market. All this helps establish the comparative value of the home. We then talk about what I expect the market value to be. Often these are the same but in such a competitive market where new sale prices are being set every day, homes are often being sold above their comparative values. This is because the market value (or the value to other buyers) is often higher due to the competitiveness of the market. Many buyers know that if they don't pay a bit more to secure the home they like today, it will take several months to find another they like just as much and at that point, they are betting the market will have increased even more than the premium they will pay today.
9. Prepare Yourself for An Emotional Roller Coaster
- It's not uncommon for buyers today to lose out on a home they love due to competitive forces or bad timing. This is all part of the learning curve and something that doesn't matter long term. Today's loss may seem bad but when my client's end up buying they almost always say they are happy they didn't take the opportunity to buy another home because they wound up with an even better one. I really believe everything happens for a reason in real estate. Buyers often look for months on end only to find, view, place an offer and buy a home within a matter of hours. It usually happens so quickly that it is both an exhilarating and really, really scary experience. When the dust settles and the realiz.ation that you bought a home sinks in, you will be happy (provided you did all the steps up till now). You should however be prepared for the swell of emotions you may feel during the buying process. I have seen all sorts of emotions, enough to tell you whatever you are feeling is perfectly normal and will be worth it in the end.
10. Have FUN!
- Buying a home doesn't have to be an exhausting, all consuming ordeal. I have so much fun with my clients. We grab a coffee, chat about the various neighourhoods, get to check out people's spectacular/amazing/well-organized/scary/horrific homes and have many laughs along the way.
If you are thinking of buying in Oakville and don't know where to start, I am happy to speak with you. I can be reached at firstname.lastname@example.org or 905.484.5162.
Happy House Hunting!