BY MATT WEBB-SMITH — The summer is surely here. I got in the car and it was so hot, my wife and I had to open the windows and blast the AC for two blocks before it was comfortable inside. And just like an overheated interior, heading down the road, the real estate market is showing some early signs of cooling off just before we get into the dog days of summer.
I am not saying that the market is heading for a "correction" or an "adjustment" — not at all — prices will likely continue to rise as they have done for the past five years. However, what we are seeing is an adjustment on the part of buyers, and a cooling off period from the intense competition that was the hallmark of the first quarter of 2021.
During January to April of this year, myself and most other local realtors would list a property on a Thursday and not look at offers until the following Monday or Tuesday, and in most cases we could expect 5-10 bids (in one case, I had 14 offers for a single home). What we are seeing now in certain price demographics is a sort of buyer fatigue and the number of bids, competing offers, is falling to maybe 2 or 3 on offer day. In some cases, even in Colliingwood, when offer day comes there is only 1 offer. Although, even in these situations recently these offers are typically without any conditions.
It's a natural reaction to an irrational market. Real estate is an emotional business — make no mistake — and with the new mortgage rules it is even harder for young families trying to break into the market, without a doubt. But even for seasoned buyers, late stage boomers, empty nesters, retirees and people with wealth and means, the market in June is a difficult place to navigate.
For many buyers, they are tired of the constant competition so many are sitting on the sidelines waiting. Meanwhile, many sellers are demanding a premium price and competitive offers for their property, i.e.: "If the house down the road sold for $X, then my house must be worth at least that, if not more."
But the truth is, no one in this market is quite sure what anything is worth. The only truth in this market is that your property is worth what someone is willing to pay for it. So strategy and planning are the most important factors you can use to maximize the value of your property or to secure a property for purchase.
On the seller's end, don't over-price the house to begin with. The best way to get competition is to price the property in a way to get the most attention from potential purchasers — as I call it — the "eyeball effect". You want to attract the highest amount of potential buyers in a Google search or on Realtor.ca.
So, price it just under the number you are trying to achieve. For example, $799K is better than $825K if you are trying to get some competition and attract the greatest number of potential clients. Remember, if you don't get the price you want, it doesn't mean you have to sell your property. An offer is only firm if you accept it.
Another aspect to consider is this: banks are conducting appraisals on nearly every property these days, so a longer closing could be a negative for your buyer, if they have a finance condition. If the bank comes to appraise the property in 3 months time and the market has changed, they can sometimes appraise the property at a lower value than the buyer has offered to pay for it, and this can put the buyer in a difficult position when it comes time to close. On any cash offer, again, tighten up the closing dates and get paid as soon as possible.
It sounds aggressive, but in a turbulent and often irrational market you have to make hay while the sun shines and ensure that you and your family garner the most out of the situation. Real estate is emotional, yes, but sometimes to succeed, you need to check your feelings at the door and do what is best for you.
Contact a licensed professional such as myself to understand where you are in the market today!
Matt Webb-Smith is a Licensed Realtor with Sutton Group Incentive Realty Inc., Brokerage.
For a free home appraisal you can contact him at firstname.lastname@example.org
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